Friday, April 12, 2013

A Writer's Taxes

We all start out as hobbyists - writing a bit here and there, sending submission after submission, starting down false paths based on shaky premises, and, in general, learning from our mistakes.  Year after year we struggle with words, grammar, syntax, punctuation, and other arcane arts of the writing guild until finally that magic letter/email arrives stating that you have pleased an editor and they are willing to give you cold hard cash for little more in return than to print your story.  There are few pleasures greater for a writer than to finally find acceptance.

None of this comes without a cost.  Modern writers need their tools - computers, tablets, paper, printers, envelopes, stamps, an Internet connection, and that most critical resource - TIME.  The usual investment greatly exceeds those first few payments you might receive. Sometimes the payments are recycled into better tools or upgraded software to make our writing less onerous.

One sale begets another and you find the modest increase to your income welcome, but give it little extra thought.  That is,  until you have to file your taxes and start receiving those Forms 1099 from the publishers. That's when you realize that Federal and State taxes have to be paid on the full amounts.

Tax deductions are allowed for some of your tools and activities, but not all.  The smart writer keeps track of  their writing income and expenses.  A simple spreadsheet and box beside your computer are all the tools you need.  If you are selling a lot or getting giga-checks from a publisher, you might pop for an accounting system, but that's usually overkill.  Toss your writing receipts into the box for tax time (Be careful to clearly keep your personal expenses separate from your writing expenses) and faithfully record ALL income. Since not all publishers send Forms 1099 to writers you might underreport your income. Starting the practice of record keeping and saving receipts might seem onerous when you have yet to make a sale, but by doing this you are investing in life long and money saving habits.

For detailed advice regarding deductions and income treatment you should turn to your local tax authority.  They can be quite helpful, regardless of whatever news they deliver.

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