Things Every Writer Should Know about Taxes--you might be doing this wrong!

 

I put this together for my writer friends from a presentation I did for the Authors Guild of Tennessee last week. I cleaned it up a bit, but it’s basically the speech I made, with the addition of links here for you. The last time I did a blog on taxes was January 2018, so I’m overdue!

 

[[It’s helpful to follow along with a 1040, a Schedule 1 and a Schedule C.

https://www.irs.gov/pub/irs-pdf/f1040.pdf

https://www.irs.gov/pub/irs-pdf/f1040s1.pdf

https://www.irs.gov/pub/irs-pdf/f1040sc.pdf

https://www.irs.gov/pub/irs-pdf/i1040sc.pdf

And this one, for home office deductions.

https://www.irs.gov/pub/irs-pdf/f8829.pdf

https://www.irs.gov/pub/irs-pdf/i8829.pdf ]]

 

 

I hope I can help you start off the new year right. We hope a lot of things are different this year! But taxes—we have to do those every year.

 

First of all, are you taking business deductions for your writing business?

Show of hands. (Only 3 in the room were filing taxes for their writing business!)

 

Let’s start by squashing the misconception, which is sometimes even believed by tax professionals, that writers can only report a loss and deduct expenses for 3 years, under the hobby law. Section 183 of the tax code lays out the “Hobby Loss” exemption. This says that you cannot deduct expenses for side activities, hobbies.

 

However, such people as visual artists, musicians, writers, and dancers are exempt IF they can prove to the IRS that they making serious attempts to earn a profit in the future, if they’re not making one now. Good records are a must. Keep track of all of your time and expenses. For us, it’s an indefinite period, as long as you’re trying and you can prove it. The IRS recognizes that it can take years to turn a profit doing these things.

 

https://www.irs.gov/newsroom/earning-side-income-is-it-a-hobby-or-a-business

https://arts4nh.org/arts4nh-blog/profession-or-mere-hobby-dont-let-the-irs-decide

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

 

This is not easy information to find! I have to look for it every year that I do a tax presentation or blog post.

 

Here’s what you must do, detailed in those links:

You must generally consider these factors in determining whether an activity is a business engaged in making a profit:

 

Whether you carry on the activity in a businesslike manner and maintain complete and accurate books and records.

Whether you have personal motives in carrying on the activity.

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 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.

You may find more information on this topic in section 1.183-2(b) of the Federal Tax Regulations.

https://www.ecfr.gov/current/title-26/chapter-I/subchapter-A/part-1/subject-group-ECFRcc67ec453a5e514/section-1.183-2

 

 

This year, you can file from January 24-April 18. Although you probably won’t have all of your income forms until later than that. 1099s don’t have to be out until Jan 31.

 

OK, we’ve established that you CAN take a loss and deduct it from you income for your taxes. Now, what do you use for filing taxes as a writer? It’s a form 1040, schedule C.

 

You’re trucking along doing your 1040, either by yourself, or with software, and you end up with line 15, your taxable income. Just above there, though, is line 8, which takes the figure from Sched 1, line 10. Sched 1, line 3, is the one we like. That’s the figure from Sched C.

 

Now that we’ve gotten that tacked down, let’s talk about that Sched C.

 

The Schedule C form can be found here:

https://www.irs.gov/pub/irs-pdf/f1040sc.pdf

 

Detailed instructions are at:

https://www.irs.gov/pub/irs-pdf/i1040sc.pdf

 

How many of you are familiar with this form? How many of you file it each year?

 

You can do taxes several ways. You can do it all by yourself, following the directions. You can use software such as Turbo Tax or H&R Block. And you can have someone prepare your taxes.

This is when you need to make sure the hobby rule isn’t used against you. Many tax professionals get this wrong.

 

If you’re not claiming expense for writing and if you want to, I’ll go over some of the line items. I’m using the lines that were from last year. They may change a bit this year.

 

At the top, the proprietor is you, and your SSN goes beside that.

A Principal business. This will involve entering a code.

I use “writer” ad my profession, “Arts, Entertainment, Recreation” as the business category and

B I use 711510 as the code.

 

C I use my pen name as my business name. My bank account is in that name as a DBA.

But if you don’t have a pen name, you can leave this blank. If you have a name for your self-publishing business, I would use that.

D is your EIN. If you’ve established a DBA, you’ll have gotten in EIN for the IRS.

 

F I use “cash” as my accounting method. It’s the easiest to use for a simple business.

G Always say YES you participated materially.

H This is where you tell them it’s a brand new business, or that you paid anyone with a 1099. I think that’s unlikely, unless you do have employees.

 

PART 1 is your income

#1 Add up everything you made and put that here.

I doubt you took returns, but if you did, that goes in this section.

You will probably have “cost of goods sold”. That’s what it cost you to make your books. That is calculated below, in Part III, and we’ll get to that.

 

PART II

Now we’re ready for the fun stuff, the expenses!

This is where you chop off the money you would owe without doing this.

 

Advertising is straight forward. Everything you spent on PR. Bookmarks, mailing out books to reviewers, online ads, etc. (Mailing can be here or under postage—doesn’t matter, just be consistent from year to year.)

 

At the beginning of the C instructions, they tell you what’s new for this year.

The first thing mentioned is almost always the mileage rate, since that changes every year. For 2021, it’s 56 cents a mile, a decrease from last year. To use this deduction, you have to know what your mileage is, of course. I hope you’ve all kept track of the miles you drive to this meeting, miles to buy paper and toner and supplies. Also miles to business meetings, lunches, and dinners—which aren’t very many for last year, I’ll bet.

 

There is a worksheet for line 9, car and truck expenses. If you didn’t keep track, it would be a good idea to estimate them. You have to know what your total mileage for the year was, to deduct car expenses. You can use the standard, or actual car expenses, but your amount will be a portion, depending on the total miles divided by the miles for business. If you don’t know your mileage on January 1^st of 2020 and 2021, you can estimate it. You count mileage, parking fees, and tolls.

 

OK, that’s line 9, mileage and car stuff.

 

I put my dues paid to the organizations I belong to on line 10.

 

My only other expense for 2020 was office expense, line 18

I put paper, toner, pencils, that sort of thing here.

 

Where you put the expenses isn’t as important as being consistent from year to year. If you count postage as an office expense, always put it there. If you put it under advertising, then keep putting it there.

 

Line 24, travel and meals

A is travel, b is meals

 

A The best deductions, for me, are conferences. That money adds up! Hotel, plane, conference registration, sometimes promo material that I bring to give away. I lament that there haven’t been any of these for the last two years. I’m hoping that will change now.

 

B meals They have always been deducted at 50% of the actual figure. However, there’s a change this time. Restaurant business meals are 100%! I’ve never seen this before. That applies to “food and beverages provided by a restaurant and paid for or incurred after December 31, 2020, and before January 1, 2023. So all of last year.

 

 

Then we get to line 30, use of the home

I take the standard for this, doing it the simple way. You enter the square footage of your house and the square footage of the office, and there’s a standard deduction for normal utilities and house expense. There is a limit of 300 sq ft for the home office. Use form 8829 for this. You add up all of your items, mortgage interest, real estate taxes, insurance, rent, repairs and maintenance, utilities, etc. And deduct the percentage belonging to your office space. 

 

Once you use the simplified method, you are locked into it.

 

So, at the bottom of Sched C, on line 31, you get your profit or loss.

That goes on Line 3, of 1040 sched 1, contributing to line 10, which goes on line 8 of the 1040.

 

 

There are a few things mentioned here for 2022:

https://www.irs.gov/newsroom/get-ready-for-taxes-heres-whats-new-and-what-to-consider-when-filing-in-2022

 

 

When you buy new equipment, electronics of office furniture, you can deduct those all at once or depreciate them with section 179. I never depreciate these things myself, just charge them in the year I purchase them.

Pub 946 has some details on this.

https://www.irs.gov/publications/p946

This says that, “For tax years beginning in 2021, the maximum section 179 expense deduction is $1,050,000.” There is also information on depreciating your race horses.

 

 

You can subscribe to tax tips:

https://www.irs.gov/newsroom/subscribe-to-irs-tax-tips

 But be warned that you’ll get lots of them, every day!

 

I hope this helps my writer friends who are new to this. Good luck!

 

 

Other links that may be useful, or may not be

https://www.irs.gov/publications/p946

https://www.ecfr.gov/current/title-26/chapter-I/subchapter-A/part-1/subject-group-ECFRcc67ec453a5e514/section-1.183-1

https://www.ecfr.gov/current/title-26/chapter-I/subchapter-A/part-1/subject-group-ECFRcc67ec453a5e514/section-1.183-2

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

https://arts4nh.org/arts4nh-blog/profession-or-mere-hobby-dont-let-the-irs-decide

https://www.irs.gov/pub/irs-pdf/f1040sc.pdf

https://www.irs.gov/pub/irs-pdf/i1040sc.pdf

royalties

https://www.irs.gov/forms-pubs/about-publication-525

http://travelswithkaye.blogspot.com/2018/02/taxes-for-writers.html

Habits, Old and New

12/7 Habits, Old and New

 

It’s nearly the end of the year. Good riddance again, right? I hope we don’t say that again next year at this time, but you never know. In fact, we’ve found out so much that we didn’t know—that no one knew—about the new virus, and what to do about it. Maybe we’ll be better prepared should another one come along in the lifetime of anyone living today.

 

Anyway, what I wanted to write about is the subject of taking stock. We add up what we got accomplished this year, and set down, at least in our minds, what we want to make happen next year. I know, the million dollar lottery, NY Times bestseller list, true love, those are on some lists, I’m sure.

 

I want to talk about habits, though. Many of my habits, lifelong habits, did not serve me well for the pandemic. One thing I’ve always liked to do when I standing in a line, like at the grocery store, is to try to chat with those around me. The way to initiate that is with a friendly smile and an observation of something happening, or a compliment on the person’s clothing, hair, nails. This last one fulfills part of my mission to try to make a person’s day better. Also, if they tell me something interesting…well…everything’s material. So that’s my selfish mission.

 

BUT, this is really hard to do when you’re not going to the grocery store. Then when you do go, you’re standing at least six feet from everyone (ideally) and wearing a mask. I know, you can smile with your eyes, but it’s hard to see. And you’re six or eight feet away.

 

It was time last year to form new habits. Buying lots of toilet paper. (I heard, knock on wood, that it’s scarce AGAIN.) Using hand sanitizer, opening doors with your shirt tail or your elbow, pressing elevator buttons with your knuckle. Washing your hand a lot. Making sure you have a mask in the car before you set out. Coming back to get one because you forgot to do that.

 I wonder which of these are habits I’ll keep up. If any. I’ll admit, I’ve gotten a little obsessed with buying TP. I find it hard to not get is every time I shop. That should be self-limiting when my closet runs completely out of space, one would think. I hope, though, that someday I’ll quit buying it and won’t need to stockpile any more. 2022? 2023? Who knows? No one.

 

 2021, 2022 images from Pixabay.com

Photos are mine

My Flash Fiction ONE WOMAN’S TRASH

10 13 2021 

In my newsletter on Tuesday, I talked about the little flash fiction story that won a contest in a local newsletter. I also am offering the book I won (on how to write flash fiction) in a drawing. You can still enter the drawing, which I’ll do on Sunday if you want to sign up for my newsletter! http://tinyletter.com/KGnews

 

Making good on the offer to share my winning story, I’m putting it here on the blog today. Hope you enjoy it! It’s very gentle—no one even dies.  

 

 

ONE WOMAN’S TRASH

 

Kaye George

word count: 997

 

Nancy Beth stumbled as she hauled the roller trash bin down the driveway to the curb. It was cold and dark. She silently cursed the absence of her husband. This had always been his job. She stopped herself before she became angry at him for dying, remembering how he had always done chores with no complaining. Why had she forgotten the trash until so late? She couldn’t see very well at night, the way her eyes were these days, with that cataract her doctor wanted to wait to remove. Also, this time of year, skunks came out at night. She could always smell them the next morning in the yard. Sometimes she even smelled them inside the house if they sprayed too near. Nancy had never met up with a skunk face to face in the wild and she never wanted to.

When she got back inside without any wildlife encounters, she washed her hands and dropped onto the couch to catch her breath. Everything seemed to be such an effort lately. She sorely missed Harvey. He had not only taken out the trash, he’d taken over doing the dishes and laundry for the last few years, telling her that she had done it long enough.

There were so many reasons she missed him. Being alone during the time of COVID had been hard. She hadn’t had anyone to talk to in the evenings, no one to warm the bed, no one to hug. And she loved him. Things were better now, but she didn’t have the energy to do much.

The discards in the trash bin weighed on her mind that night. She had finally, after three years, gone through Harvey’s last few things. Months ago, her son had helped her take the wearable clothing to the charity store and the other kids had picked out what they wanted as keepsakes of their father. What was left, besides what she held onto, was worthless. Some worn out shoes, old clothing with holes and torn places, a down vest that had leaked most of the stuffing years ago. Still, she thought about those things sitting out by the curb. And missed him even more.

***

John shook the leash and Candy came running, ready for her early morning walk.

“Who’s a good girl?” he crooned, squatting down and putting his face near hers while he fastened the leash. Candy’s tail whipped harder than ever. She knew she was a good girl.

They set out on the usual route, three blocks up the street, then turn around and come back three blocks home. The sun was warm on his head and shoulders and birdsong serenaded them. John felt good. Finally. He would always miss Carol, his deceased wife, but getting Candy, a beagle mix, from the shelter six months ago had been the best idea he’d had in ages. Before Candy, he’d been challenged by learning to cook and clean, all the things Carol had done for him. But he felt years younger and stronger since he’d started walking Candy every day. She was someone to talk to, and to cuddle with on the couch watching TV in the evening. Or during the day, for that matter. His days and nights sometimes ran together since Covid.

When they reached their turning-around point, Candy reversed, but John wanted to stay outdoors and pulled her forward.

“Let’s go another block today, girl. Expand our horizons.”

She eagerly agreed and surged ahead. Halfway up the block, a trash bin teetered precariously over the curb. Candy lunged at it and knocked it over with a clatter.

“That’s not good, Candy.” John watched the contents strew into the street. Before he could rein her in, Candy tore into one of the plastic bags. “No!” he shouted, and pulled her back, but she had a blue vest in her mouth, a down vest, mostly flat and devoid of the filling. Men’s clothing scattered from the bag, some items clinging to the vest. He wondered if there had been a divorce at this house.

“What am I going to do with you?” He pried the garment from her teeth and looped her leash around the mailbox on the other side of the driveway, then knelt and started to gather the clothing to stuff it back into the bag. No good. The bag had a huge hole now.

A shadow fell over him and he looked up to see a woman standing over him, shaking her head and smiling.

John jumped up. “I’m so sorry. My dog knocked over your trash bin and pulled these things out.”

“I know. I saw it from the house.” Her smile was radiant. She held a new plastic bag, which he took and filled with the clothing, and a couple of pair of shoes.

When he was finished, he made sure the bin was secure, not threatening to fall off the edge of the curb.   

“I put it out too far,” she said. “It was partly my fault. It’s hard to see in the dark.”

Unable to contain his nosiness, John asked, “Did your husband get a lot of new clothes?”

She shook her head and her lovely face crumpled slightly. “No, I just got around to getting rid of the last of his things. He passed away a few years ago.”

“I lost my wife a few years ago, too. It’s been hard, hasn’t it? I’m John.”

She nodded.

He liked how easy it was to talk to her. “Can I take you out for coffee? To make up for tipping your trash over?”

She liked that he was kind, and that he had a dog. You could trust dog lovers. But she would go slowly. “Yes, coffee would be nice. Thank you. I’m Nancy Beth.”

When she leaned down to pat Candy’s head, the dog licked her hand.

One woman’s trash was another man’s treasure, John thought.

Copyright 2021 Kaye George

 

On Writing

 

9 29 2021 On Writing

 

I just want to touch briefly on something I’ve had on my mind before it vanishes, as those things tend to do sometimes.

 

I’ve been reading, in a couple of places, about contrasts in writing styles. The gist of these essays were that there are two styles, likened to nails and headlights. You either nail down you plot ahead of time, or see only as far as a headlight as you go along. These styles are also called “pantsing” and “plotting.” It’s been my feeling, and I thing I’ve written it here before, that every writer is actually a combination of these two. No one plots every single detail before they start writing and never changes a thing. Also, no one starts writing having no idea at all what they’re going to write about. Like, what shall I touch upon today? Ice cream, romance, murders, windows, game shows? No, the story and the characters unfold for both kinds of writers, for every writer. That’s why this is called a creative process. The story is being created.

 

One of my sources is this article from the Suite T blog, an offshoot of Southern Writers Magazine:

https://southernwritersmagazine.blogspot.com/2021/09/do-i-use-nails-or-do-i-use-headlights.html

 

But I have to add one more thing that helps me to say what I want to say in my fiction, as I headlight and nail along. That’s a quote by Georgia O’Keeffe that hangs on my office wall. I bought it in the O’Keeffe museum in New Mexico (which you should visit if you get a change). My photo doesn’t capture the fine print, which is: “Details are confusing. It is only by selection, by elimination, by emphasis, that we get at the real meaning of things.”

Image is mine

The Winner!

 Aaaand, drum roll...we have a winner for Lorie Lewis Ham's brand new book!

Congrats to Grandmas Cootie! Whom, I am positive, does NOT have cooties. I've seen her name around enough to know she's an avid reader and supporter of mystery fiction. 

For everyone else, you can nip over to 

Amazon: https://www.amazon.com/One-Us-Tower-District-Mystery/dp/B09BDVRKH3/

B&N Nook: https://www.barnesandnoble.com/w/one-of-us-lorie-lewis-ham/1139990160?

or Kobo: https://www.kobo.com/us/en/ebook/one-of-us-54

HAPPY READING TO ALL!

Lorie Lewis Ham is here today!

 I'm so delighted to welcome Lorie Lewis Ham to my blog today, and so excited about her new book. Lorie, in her role as editor of Kings River Life Magazine and the new Mystery Rat's Maze Podcast had been a valueable friend to many writers over the last several years, and one of them is me. Here's my chance to pay her back. Here's her essay on her new novel--be sure to check this out!

GIVEAWAY! LORIE WILL GIVE AN E-BOOK AWAY TO ONE PERSON WHO COMMENTS, LEAVING AN EMAIL ADDRESS (which can be disguised, kayegeorge at gmail dot com, or somesuch.). She will pick the winner before next Wednesday. Good luck!

“One of Us” is available on Amazon, on the Nook at Barnes and Noble, and Kobo.

 Book Settings-Why I Set My Book in the Tower District of Fresno, CA

By Lorie Lewis Ham

 

My first mystery came out in the early 2000s and featured a gospel singing sleuth. I set that series in a fictional version of my hometown of Reedley, California, largely because it was what I knew. The last book in that series came out 11 years ago.

 

As I started working on a new book I knew that I wanted to do something different so I decided to set my new book, which is the first in a new series, in a place that is very dear to me, the Tower District in Fresno, California.

 

The historic Tower District is Fresno's dining, arts, and entertainment hub. People might be surprised to know this, but a great deal of community and regional theatre happens in the San Joaquin Valley and much of it happens in the Tower. My main character, Roxi Carlucci, actually helps out with a theatre production in this book and that is where the murder takes place. The Tower is also the home of the Rogue Festival, a fringe festival where performers from all over the world come to perform (this festival will be featured in a future book). You will also find unique shops, restaurants, clubs, coffee shops, tea shops, and much more.

 

Here is a bit of description of the area from my new book “One of Us”

 

“As we walked to the heart of the Tower and its many shops and restaurants, I felt like I'd gone back in time. I had read in an article that most of the houses had been built between the 1920s and the 1950s. There wasn't a new house in sight—each home had the kind of character only houses built before the 1960s seemed to have. The streets were lined with various kinds of tall trees. Even the sidewalks had a bit of character with its cracks and unevenness here and there.”

 

I love the Tower District, it is my favorite place in the area to hang out, so I hope you will all take a journey with me to the Tower District in my new mystery novel, and I hope some of you will come check it out in person as well. Keep in mind that my version is somewhat fictionalized—adding businesses that were needed for the sake of the story and changing some of the names—but it is still just as wonderful!

 

One of the locations mentioned in “One of Us” (it is also on the cover of the book), is the Tower Theatre. Its very existence and the Tower District way of life is currently at risk. If you would like to know more you can find information on the Facebook page for “Save the Tower Theatre.”

 

“One of Us” is available on Amazon, on the Nook at Barnes and Noble, and Kobo.

 

“One of Us”  A Tower District Mystery by Lorie Lewis Ham-

A woman starting over. A gossip website. A handsome playwright with a dark side. A director with an explosive temper. And a murder without a motive. It’s a mystery set in the historic Tower District—Fresno's dining, arts, and entertainment hub.

 

Bio- Lorie Lewis Ham lives in Reedley, California and has been writing ever since she was a child. Her first song and poem were published when she was 13, and she has gone on to publish many articles, short stories, and poems throughout the years, as well as write for a local newspaper, and publish 6 mystery novels. For the past 11 years, Lorie has been the editor-in-chief and publisher of Kings River Life Magazine, and she produces Mysteryrat’s Maze Podcast where you can now hear an excerpt of her new book One of Us. You can learn more about Lorie and the new book on her website mysteryrat.com and find her on Twitter @mysteryrat and Facebook. Another way to keep up with Lorie’s writing is to subscribe to her newsletter, which you can do on her website. 

 

Lorie has been married to Larry for 30 years and they have 2 grown children—Jayce and Joseph Ham. She currently has 5 cats (Merlin, Sam, Dean, Sidney, and Willow), 4 dogs (Lestat, Huey, Xander, and Phoebe), and a pet dwarf rabbit (Sherlock). For many years, she worked in pet rat rescue, and has had many pet rats of her own over the years.

What Is Broken and What Is Not?

I asked myself that question after I reviving a mental health help that I last used just about exactly a year ago. My crutch is a Worry List. I started it when my husband was ill and dying and I was worrying all day every day. When I put my concerns and issues on a list—actually wrote it out, I found I could read my Worry List once a day, give myself some fretting time, then spend the rest of the day less concerned. It worked, well enough anyway.

 

Last year at this time it held things like Covid, our political problems, the condition of my yard, my failing car, and some red spots that were on my carpet.

 

This year it’s more like, Covid, the impending destruction of the planet, the looming demise of democracy worldwide. You know, actual apocalyptic stuff.

 

Which led me to these two questions: What is actually broken? But, more importantly, what is not broken? Maybe the concentration should be on the latter. There’s plenty there. What would my Non Worry List look like? The things I don’t have to worry about. Thing that don’t weigh me down.

 

I always start with this one. I am above ground, one more day.

 

I have three health children and their spouses, plus seven healthy grandkids, all of whom get together and love each other, and love me. And I love them.

 

I am able to do something I wanted to do all of my life, without impediments—write novels and short stories and actually get them published and read.

 

The community I belong to, mystery writers, are the best people, as a group, on the planet. I firmly believe that. They are wonderful, supportive, kind, helpful—just everything you need from a support group and a bunch of colleagues.

 

These are way down on this list, but they are not unimportant. I had a house with heat and AC. I have enough food. I have medicine when I need it. I have all the clothing I need and the ability to buy more when I feel like it. The basics, right? Food, clothing, shelter.

 

What’s on your Worry List? But, better yet, what’s on your Non-Worry List? One might even call it a List of Things to Be Thankful For.

 

Image of weight by Castlelass at Morguefile

Image of balloons by davide25 from Pixabay