Author situations differ. Some authors make a lot of
money and writing is their only source of income. Some have full time jobs and
writing provides some of the household income. Either way, the income made from
writing must be claimed during tax time. The only difference is if you have a
side from writing, your employer is withholding taxes. In your writing
business, you should be paying estimated quarterly taxes based on your total
income (just writing or income from writing and other jobs and sources). What
you may not realize is that authors and other authors can write of many
expenses.
There are myriad expenses that authors can right off.
However, I would issue a word of caution: speak with the IRS, state and local
sales tax representatives, and tax accountants. The laws are not always clear,
so any research you do can only help to solidify your responsibilities while
also dispelling any rumors you may be hearing concerning taxes.
I decided to increase my knowledge of what expenses I can
write off after going to a new business orientation sponsored by our state and
local tax office. The orientation was very helpful as it allowed me to ask
specific questions of whether or not I should charge sales tax, who I should
tax and how to do so. Though I initially engaged with fear and trepidation, I
left with a little frustration about having to pay privilege business tax, but
a whole lot of confidence in how to manage sales. This piqued my curiosity to
discover what could actually be a write off expense to lower my tax burden.
Since then, I've filed my sales taxes on time and with little difficulty and have
learned what I can do to reduce my tax burden.
So, what can authors write-off?
Authors can write of anything that justifiably supports
the profit making business. Red Bike Publishing, my publishing company has many moving parts, which
I have to maintain. Though I've written Get Rich in A Niche a book about
publishing and marketing books for little or no expenses, there are costs that
lead authors to book products that should be tracked and added as expenses
during tax filing. These include research, business development, doing
business, supplies, and equipment.
Research
I currently have a book idea that is maturing. I've been
working on it for about a year and soon will have enough experience and know
how to present this idea as a book. The topic is exercise and how to prepare to
be competitive in popular race events called mud runs. In this book I
demonstrate how I was able to shave off six minutes from my performance over
five kilometers of mud and obstacles. I also update http://Runinmud.blogspot.com, a
blog that supports the upcoming book and is packed full of exercises. Hopefully
this book and blog will help people in average physical condition improve their
performance and increase their personal record. This type of book requires
preparation, going to events and other research, and that research requires
resources. I am keeping track of my fuel, room and other expenses required to
make it to the events. These expenses directly impact the book's subject and
are related to the research. I also generate an income by selling motivational
stickers on www.cafepress.com/redbikepublishing
I also maintain many blogs related to my book topics and
the consulting I give. These topics lead to points of sale and are result of
research. When I spend money and resources on research and can link them to an
expense, I will write that expense off. For example, when I do research for http://jeffsmovieswag.blogspot.com/ my
movie 80's review blog; I will write that expense off. For example, if I rent a
movie that I intend to review, I can write that off. However, if I take my wife
on a date to a recent movie release, I will not write that off. The date and
movie topic have nothing to do with the 80's movie reviews. There also 80's
motivational stickers generating income on www.cafepress.com/redbikepublishing.
Business Development Costs
In effort to increase sales, you might have to advertise,
join subscription services that manage your communication, set up a booth at a
professional conference, join a professional organization or network to get the
word out. These expenses do help generate revenue, but can be deducted as they
also chew into your profit. Entertaining clients such as book store owners,
future authors, or resources for books can be written off as well. You should
document these events with dates and receipts and be prepared to show a
relationship to your business. You might also account for the cost of attending
conferences, giving out review copies of your books and etc.
After the book is written, authors need a point of sale
and this includes website development and hosting. Also, shopping carts are
needed and these cost as well. Business cards, marketing efforts, client
dinners and other business developing and marketing costs should also be
captured.
Cost of Doing Business
Website maintenance, email, newsletter services, advertisement,
supplies, printing costs are just a few costs authors and book sellers may
face. Many niche publishers, indie authors market out of their own pockets,
using the internet for points of sale.
Supplies
Paper, pens, pencils, markers and other expendables
associate with your writing should be annotated. These expenses should be
tracked and documented for tax returns. Most of authors write and store files
on the computer. Some actually review and edit those files directly on the
computer, however many, like me, actually like to print our writings. I print
everything for review and edit many times over. I even print manuscripts
exclusively writing for eBook publishing. I print for editing many times over
before I even publish them online. One book may produce a few reams of paper
before complete and this adds to the cost supplies. A related expense is
printer ink, so don't forget to add it. Fuel is also an expenditure for
business related errands. Be sure to have a log that lists the distance driven
and a date at the minimum. The IRS will give a cost per mile credit of 56.5
cents per mile.
Equipment
Computers, printers, and publishing services are some
relevant costs with getting a book to market. These are usually sunken costs
that go into preparing a book for market. These expenses can be claimed for tax
purposes both as an expense and as depreciation. Some printers have built in
capability to fax, copy and scan. Be sure to keep receipts for any equipment
that you use for book publishing purposes. PO Box- annual fees should be
itemized
It's hard enough to make a living writing for a living or
running any other type of business. Expenses add up quickly and taxes should be
filed on time. The good news is that much of your hard spent expenses can be itemized
for tax deduction. This article discusses but a few expenses authors can write
off. Be sure to check local laws as well as those that allow for deductions.
It's worth the effort.
Jeffrey W. Bennett, ISP is the owner of Red Bike Publishing. Jeff is an accomplished writer of non-fiction books, novels and periodicals. He also owns Red bike Publishing. Published books include: "Get Rich in a Niche-Insider's Guide to Self Publishing in a Specialized Industry" and "Commitment-A Novel". Jeff is an expert in security and has written many security books including: "Insider's Guide to Security Clearances" and "DoD Security Clearances and Contracts Guidebook". See Red Bike Publishing for print copies of: Army Leadership The Ranger Handbook The Army Physical Readiness Manual Drill and Ceremonies The ITAR The NISPOM
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