Wednesday, February 4, 2015

TAXES FOR WRITERS

I put the topic in caps because this is important! You don’t want to miss out on what is, as Lucy says, “only” your “fair share”.

Some writers, even a lot of tax accountants, think the IRS hobby rule applies to writers. It doesn’t have to, if you’re serious about your writing.

To begin with, take a look at this IRS publication: http://www.irs.gov/irs/article/0,,id=186056,00.html
If you’re starting out as a full-time writer, you don’t have to declare income 3 of the last 5 years if you satisfy some requirements.

The important points for you, as a beginning writer (not making any money), from this article are:
  • Does the time and effort put into the activity indicate an intention to make a profit?
  • If there are losses, are they due to circumstances beyond your control or did they occur in the start-up phase of the business?
  • Do you have the knowledge needed to carry on the activity as a successful business?
  • Do you expect to make a profit in the future from the appreciation of assets used in the activity?

You can report losses on a Schedule C for quite a few years before the IRS will take a look at you. See this article, which elaborates on the above:

This link gives some checkpoints to make sure you’re fulfilling the requirements:

You can see that it’s important to be keeping records of submissions, classes, time spent, and to conduct writing as a business in every way you can. Also, of course, keep track of what you can deduct.

This article goes into exquisite detail: http://www.eclectics.com/articles/taxes.html
This one includes some forms to help you keep track if you don’t already have some that you like: http://www.artstaxinfo.com/writers.shtml


I hope this helps. Don’t lose out on loss deductions that you’re entitled to. And may you someday be declaring a profit! I did last year for the first time in 12 years. It was a small 3-figure profit, but maybe someday it’ll be more.



11 comments:

Mary Black said...

Thanks for this really helpful post Kaye! I plan to share this.

Kaye George said...

You're welcome! (I wish I hadn't been too tired to fix all that white space last night, but at least it's legible.)

Mary Black said...

How do I 'share" this? buttons?

Kaye George said...

You can either use the Share It buttons or you can use the address:
http://travelswithkaye.blogspot.com/2015/02/taxes-for-writers.html

Thanks!!

Ron Fritsch said...

Thanks for this, Kaye George. All starting-out writers should have a good understanding of the tax aspects of what they're doing. Some of them can be beneficial.

Kaye George said...

I agree! You're welcome, Ron. Thanks for stopping by.

LD Masterson said...

Thanks for these links, Kaye. I'm saving this post for future reference.

Kaye George said...

I'm glad you can use this, LD.

Kaye George said...

I just got a question about DBAs, so I think I might do a blog on that next week. Meanwhile, I'm going to put these 2 links here so I don't lose them.
http://www.legalzoom.com/sitemap-dba-state-requirements1.html
and
http://dbafilingonline.com/dba-by-state/

Pam De Voe said...

This is so helpful. Thanks a bunch.

Kaye George said...

You're welcome!