TAXES FOR WRITERS

First off, I’ll say that the new tax bill does NOT affect anything for this year’s filing. And, for writers, there shouldn’t be much change next year. See the link near the end of this for an article on that.

As for this year, here’s my best non-legal annual posting of tax information. If you’re new to this, the first decision you have to make is whether or not you’re serious about writing. If you’re truly striving for publication and want to make money at it, you can file without abiding by the hobby rules, which prevent you from taking all of your deductions if you don’t make a profit 3 out of the last 5 years.

Here are some IRS pages to help you decide:

https://www.irs.gov/newsroom/hobby-or-business-irs-offers-tips-to-decide

https://www.irs.gov/faqs/small-business-self-employed-other-business/income-expenses/income-expenses

The factors the IRS uses to determine whether or not you are treating your writing as a hobby or not.

• Whether you carry on the activity in a businesslike manner and maintain complete and accurate books and records.
• Whether the time and effort you put into the activity indicate you intend to make it profitable.
• Whether you depend on income from the activity for your livelihood.
• Whether your losses are due to circumstances beyond your control (or are normal in the startup phase of your type of business).
• Whether you change your methods of operation in an attempt to improve profitability.
• Whether you or your advisors have the knowledge needed to carry on the activity as a successful business.
• Whether you were successful in making a profit in similar activities in the past.
• Whether the activity makes a profit in some years and how much profit it makes.
• Whether you can expect to make a future profit from the appreciation of the assets used in the activity.

Pay close attention to the first two bullet points on that last page and repeated above. Keeping records is essential. Keep track of the time you spend writing and submitting, and all of your expenses, including mileage, office supplies, advertising, instruction, conferences, etc. Meals at conferences can only be expensed at 50% of the cost, since you would be eating even if you weren’t there. Write down your mileage every year on January 1st!

I recently found this site with good articles for authors. This one lays out the IRS points in the above publication and explains them in details.

https://www.thebalance.com/hobbyist-vs-pro-tax-guidelines-for-book-authors-2799859

This article from the same people, written October of 2017, give tax deduction tips for authors.

https://www.thebalance.com/tax-deduction-tips-for-authors-2799906

The IRS gives you a break as a writer, knowing that it can take years before you make money. You can report losses on a Schedule C for quite some time before the IRS will take a look at you because of Section 263(a)(h). See this article, which elaborates on the above:

http://taxsolutionsforwriters.com/2014/02/16/a-special-provision-for-writers-in-the-tax-law/
Cornell Law School explains this here:

https://www.law.cornell.edu/uscode/text/26/263A

Page down to (h) to see the section on authors, photographers, and artists.

IF YOU’RE USING A TAX PROFESSION, MAKE SURE THEY KNOW ABOUT THE WRITER EXCEPTION. Amazingly, many do not.

Here’s another detailed article on authors and the IRS: 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

The company that posted the forms also has an article on what’s coming up next year for us:

http://www.artstaxinfo.com/tax_act_creative2018.shtml

They see no significant changes for writers next year—good news!

AND, finally, changes for this year from two different sources: 

https://www.hrblock.com/tax-center/irs/tax-law-and-policy/tax-changes-in-2017/

https://www.fool.com/retirement/2016/11/27/5-tax-changes-for-2017-youll-want-to-know-about.aspx

Mileage will be 53.5 cents a mile, down from last year, and your standard deduction may go up slightly.

I can’t find a nice neat summary on the IRS site of 2017 changes, such as they had last year.

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 made my first profit after filing as a writer for 12 years. A whole 3 figures.

tax forms from Dreamstime

woman writing from Good Free Photos

fireworks from morguefile