Last minute tax tips
Posted: April 11, 2011 Filed under: accounting for freelance writers, taxes for writers, Uncategorized | Tags: taxes for writers Leave a comment »Disclaimer: I’m not an accountant; I’m a writer, but my husband used to be professional tax man and he taught me a lot.
I hope this blog is coming after the fact for most readers. I hope you have finished your tax returns, sent them in and collected your refunds by now. But if you haven’t, or you weren’t too happy with the results, here are a few words of wisdom.
If you make money with your writing, you are supposed to report it on your tax return. If you make more than $600 from any one publisher, they will be reporting it to the IRS, so you need to report the income. If anybody pays you royalties, they will also be sending a form to the IRS. Even if you don’t make much money, you should list your income, not only because it’s the right thing to do, but to show that you’re seriously working at your writing and so you can deduct your expenses.
If you’re writing for publication, you can claim your writing expenses on Schedule C, the form for small businesses like yours and mine. The things you can claim include: office supplies, Internet connection fees, postage, travel for interviews, tuition for classes and workshops, publications you buy for your business, contest entry fees, and more.
To verify these expenses, you need to keep receipts and keep records, either on paper or on the computer, for every work-related expense and every work-related mile you drive. It doesn’t have to be complicated, and it doesn’t have to take a lot of time, but you need to do it.
Note that most accountant types are not writers and don’t really understand our financial situation, so we have to be ready with clear records, whether we do our own taxes or pay someone else.
People often wonder if they can still deduct writing expenses if they’re not making a profit. The answer is yes. Ideally you should make a profit within three years, but if you don’t and you can show that you are working hard at it, that you have “profit motive,” you should be all right.
I talk about a lot of tax issues in my article, Tax Relief, that ran in Writer’s Digest a few years ago. Other helpful articles include Writer’s Guide to Taxes by Emory Hackman and Bonnie Lee’s Tax Advice for Writers at the writersdigest.com site. You might also want to get the Writer’s Pocket Tax Guide. Updated every year, it’s available as an ebook, if you’re in a hurry.
Good luck. Get it done, so you can hurry back to writing.
>Can I Deduct This on My Income Tax?
Posted: October 8, 2010 Filed under: Grant Dobbins, taxes for writers, Write on the Sound conference Leave a comment »>I was out of town last week, attending the Write on the Sound conference in Edmonds, Washington. Natalie Goldberg was the keynote speaker, and Sheila Bender gave an extended workshop on writing memoir. I was delighted to discover I had won second place in the poetry division. I came away with lots of notes and inspiration.
On the way, I visited several places that I hope to write articles about. I muddied my shoes and got blisters on my feet, but I brought home some great pictures and story ideas.
I spent quite a bit of money on all this travel, so the question arises: Is any of this tax deductible? The answer is yes. The main purpose of the trip was the further my writing career. Sure, I had fun along the way, but I can definitely deduct the conference as education and many of my expenses as research.
How do you know what to deduct? A recent article posted online by Grant Dobbins, “Taxes for Freelancers: 20 Deductions You Should be Taking and How,” should clear up some mysteries. It’s on a site for graphic designers, but the rules apply to freelance writers, too.
Wait a minute, you say. Am I supposed to be doing tax stuff with my writing? Here’s the deal. If you make any money writing, you need to declare it as income, and you are entitled to deduct your writing-related expenses. Not making a profit? That’s all right, as long as you can show what tax folks call a “profit motive.” In other words, you’re trying. Of course, you can’t deduct $100,000 in expenses with $20 income. Think reasonable expenses incurred in a serious effort to write and publish.
We’ll talk more about this as we get closer to tax season, but for now, just make sure you keep all your receipts and keep a record of your writing income and expenses.
I welcome your questions and comments.
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Have you purchased your copy of Freelancing for Newspapers yet?
>Taxes!!!!
Posted: April 15, 2009 Filed under: deductible expenses, taxes for writers Leave a comment »>Happy tax day. I hope you’re not still stressing over your return, but if you are, remember that you can deduct your expenses as a freelance writer. You need to fill out a schedule C as sole proprietor of your own business, but that’s not as hard as it sounds. Just fill in the blanks. You’ll need to know how much you made, how much you spent and what you spent it on? Didn’t keep track? Uh-oh. Start right now and try to recreate as much as you can from January through now then keep it going through the year in a ledger book, a program such as Quickbooks or notes on your daily calendar. And keep your receipts!
Even if you don’t make any money this year, you can deduct your expenses as long as you can show through your submission records that you’re trying to make money. Among the deductibles: office supplies, computers, mileage, photo gear, telephone and Internet expenses, writing courses, workshops, and conferences, publications connected to your work—including your daily or weekly newspaper—and work-related travel expenses. If you’re making lots of money and you have a home office dedicated to writing, you can also deduct the costs of that space. However, don’t bother if your expenses already outweigh your income. If you already make way more than you spend, hire an accountant to worry about this stuff for you.
If you’ve got questions, you can find many answers at www.irs.gov.
