I looked up after Christmas and realized it was almost THE END OF THE YEAR. Oh no! Suddenly my newsletter is due in a couple days, I have to pull my financial records together for my writing business, and if I don’t use my free lunch at Georgie’s by Tuesday, I’m going to lose it. Plus I have all my regular work to do and bills to pay when all I want to do is take a vacation, preferably someplace warm. My teacher friends have another week to relax, but I’m a writer and a musician. That means I’m self-employed and need to get my act together for a new year.
If you’re a writer or any kind of artist, you’ve got some work to do, too. It falls into two categories: closing out the old year and planning for the new year.
Closing out the old year:
Finances: If you make any money with your writing, you need to report it on your income tax. You can offset that income with your writing-related expenses, but only if you’ve kept track of them throughout the year. I hope you have. If not, start now. It doesn’t matter whether you do it by hand in a notebook, put the numbers in a spreadsheet, or use a program such as Quickbooks, but you need to keep records and keep your receipts. That way, if the IRS questions your return, you have the paperwork to back it up. While you’re at it, take a look at what you earned and what you spent. Is it out of balance? What can you do better next year?
Files: If you’re like me, the paper piles up and so do the computer files. Now is a good time to sort through it all. Put current projects close at hand. File or toss the rest. Clear the desk for a fresh start. It’s also a good time to purge unneeded emails and computer files.
Year-end report: Unlike big companies with stockholders and boards of directors, writers are not required to report to anyone about our year’s accomplishments, but it’s still a good idea to look back and see how you did. What did you write? What did you publish? How did you progress in your writing career? If you kept writing all year, consider your year a success.
Planning for the new year
Finances: Now is the time to buy a new ledger, start a new spreadsheet, or open a new file in your computer program to record your income and expenses for the new year. You might want to set a budget and income goals. Think about what you can do to spend less and earn more.
Setting writing goals: As you start the new year, what do you hope to accomplish in your writing in 2014? Will you finish that novel? Submit more articles? Start a blog? Take a class? Write it down and give yourself deadlines, then post your goals where you will see them every day.
Then . . . Go Write.
I have updated my resources page with more books and more links. Click on “Resources” above. If you find any errors or have additions to suggest, please let me know in the comments or at email@example.com.
Jan. 2 is the deadline to sign up for my online classes, listed under “Classes” above. I’m offering courses on blogging, columns, opinionated writing, and writing and selling freelance articles. If I don’t have enough signups by Thursday, the classes will not be offered this term.
Happy New Year to one and all!
Disclaimer: I’m not an accountant; I’m a writer, but my husband used to be a professional tax man and he taught me a lot.
I hope this blog is coming after the fact for most readers. I hope you have finished your tax returns, sent them in and collected your refunds by now. But if you haven’t, or you weren’t too happy with the results, here are a few words of wisdom.
If you make money with your writing, you are supposed to report it on your tax return. If you make more than $600 from any one publisher, they will be reporting it to the IRS, so you need to report the income. If anybody pays you royalties, they will also be sending a form to the IRS. Even if you don’t make much money, you should list your income, not only because it’s the right thing to do, but to show that you’re seriously working at your writing and so you can deduct your expenses.
If you’re writing for publication, you can claim your writing expenses on Schedule C, the form for small businesses like yours and mine. The things you can claim include: office supplies, Internet connection fees, postage, travel for interviews, tuition for classes and workshops, publications you buy for your business, contest entry fees, and more.
To verify these expenses, you need to keep receipts and keep records, either on paper or on the computer, for every work-related expense and every work-related mile you drive. It doesn’t have to be complicated, and it doesn’t have to take a lot of time, but you need to do it.
Note that most accountant types are not writers and don’t really understand our financial situation, so we have to be ready with clear records, whether we do our own taxes or pay someone else.
People often wonder if they can still deduct writing expenses if they’re not making a profit. The answer is yes. Ideally you should make a profit within three years, but if you don’t and you can show that you are working hard at it, that you have a “profit motive,” you should be all right.
For more tax advice, read Bonnie Lee’s Tax Advice for Writers at the writersdigest.com site. You might also want to get the Writer’s Pocket Tax Guide. Updated every year, it’s available as an e-book, if you’re in a hurry.
Good luck. Get it done, so you can hurry back to writing.
>Happy tax day. I hope you’re not still stressing over your return, but if you are, remember that you can deduct your expenses as a freelance writer. You need to fill out a schedule C as sole proprietor of your own business, but that’s not as hard as it sounds. Just fill in the blanks. You’ll need to know how much you made, how much you spent and what you spent it on? Didn’t keep track? Uh-oh. Start right now and try to recreate as much as you can from January through now then keep it going through the year in a ledger book, a program such as Quickbooks or notes on your daily calendar. And keep your receipts!
Even if you don’t make any money this year, you can deduct your expenses as long as you can show through your submission records that you’re trying to make money. Among the deductibles: office supplies, computers, mileage, photo gear, telephone and Internet expenses, writing courses, workshops, and conferences, publications connected to your work—including your daily or weekly newspaper—and work-related travel expenses. If you’re making lots of money and you have a home office dedicated to writing, you can also deduct the costs of that space. However, don’t bother if your expenses already outweigh your income. If you already make way more than you spend, hire an accountant to worry about this stuff for you.
If you’ve got questions, you can find many answers at www.irs.gov.