Tax Tips for Writers: Overview
It is that time of year again for all of you writers out there to gather together as many tax tips that you can.
This article about tax tips for writers is only the beginning – a table of contents – for a series of articles about tax tips for writers and other self-employed people.
In general, tax tips for writers are the same as tax tips for any self-employed person. You will most probably be required to file a Form 1040 (Long Form) and complete a Schedule C to report your income or loss from your self-employment.
The writing discipline itself offers one of the best tax tips for writers. Just as your characters require a motivation for what they do or do not do, writers, and other self-employed people, must have a profit motive when engaging in an activity that they hope to have considered a business activity and not a hobby.
As an author, you will generally receive publishing revenues and/or royalty revenues. Depending upon the given set of circumstances, each type of revenue might qualify for different tax treatment. In my opinion, active revenues, such as publishing revenues, are subject to federal income tax and self-employment tax because work is performed in exchange for the publishing fee. Royalty revenues, however, are not received for work that is performed, but for the usage of your work at some point after your having produced and sold the work.
You can deduct ordinary, necessary and reasonable expenses that arise in the course of your writing work. For example, you can depreciate your computer and deduct the costs associated with the business use of your home.
In a nutshell, you will owe tax on a profit and you might be able to use a loss against the taxable income in prior periods and future periods.
I must caution you that this article and the other, soon to be linked articles, MUST NOT be used as the final authoritative guide for the preparation of your income tax returns. I have written these articles to help you think outside the box with respect to how you conduct your businesses and how the tax rules and regulations might be applied in ways you have never thought of before. I am NOT representing myself as an authority. I am NOT responsible for your use or misuse of the information I am providing in these articles. You must, therefore, seek competent professional advice regarding your income tax returns and the possible application of the tips I have provided.
Please check back often, as I will be providing additional information regarding tax tips for writers and other self-employed people.
