Once upon a time I was involved in a chat at www.thewriterschatroom.com and taxes for authors were the topic. Here is the information I garnered from the chat. I think taxes are a necessary evil and there was no way to make it humorous. So here is the untarnished truth, dry and humorless. But it you start the New Year out with these in mind you’ll be in better shape when taxes roll around in April.
There are two issues with taxes as an author. One is that most authors are self-employed and need to file taxes for the self-employed and the other is income taxes. Income taxes are based on your income and there are deductions you can use to reduce the amount of income tax you pay. And as an author and most authors are self-employed, you pay self employment taxes on your profit. For the self-employed one has to hold back twice the Social Security and also pay into Medicare. Social Security is 12% and Medicare is 3 or 4% more.
The deductions for income tax for self employment need careful record keeping. As a self-employed author you need to file income tax quarterly. If you have an office in your home, and most authors work out of their home, you can deduct for that. Otherwise itemize if you want to deduct office expenses.
You can write off 50% of your computer if you use it for writing and also personal use. If you have a computer used solely for writing and only writing you can deduct 100%.
Here is a list of what you can deduct:
- Your workshops
- Your ink, paper
- Trips to the post office to mail submissions
- Return envelopes with stamps
- Envelopes and stamps
- Mileage that is for business
- Mileage for critique groups, book signings
- Dues for writer organizations
Because it is so detailed to itemize you have to keep careful records. As you work, write down the writing expenses and save them for tax time.
This information above was obtained from a writers chat room chat on August 31, 2011. You can join in for other relevant chats at www.thewriterschatroom.com. There’s usually an issue relevant to writers on Wednesday and a chat with a well-known author on Sunday. My writer’s group also meets Wednesday evening so it isn’t often I can attend on Wednesday. I’ve found this site to be friendly to new comers and generally love to attend when I have time. I hope to see you there sometime. You can sign in anonymously or as I do, I just go as Clar.
What other expenses can you deduct? Have you thought about this issue before?