by Lindsay Flanagan and Precision Editing Guest Contributors
Josi S. Kilpack and Heather Moore
Taxes. What a fun subject, right? Not? Well, doing your taxes (or paying them) may not be fun, but going to Italy to research your new novel—and writing off a lot of the trip—might be!
As a professional writer, you can deduct your writing expenses—some of which might surprise (and delight!) you. However, the rules are kind of complicated (it is the IRS), so we’ve summarized important tax tips that we hope will get you started on tracking the right receipts and avoiding newbie mistakes that will get you audited.
Determining What Type of Writer You Are
The first thing you’ll need to to determine is if you’re a “professional writer” or a “hobbyist.” (The IRS won’t allow you to write off expenses for your hobbies. Sorry!) A hobby writer is someone who writes without earning or without the intent of earning income. If you’re self-publishing novels just for fun and just for you, you may qualify as a hobby writer. However, if you happened to earn a little money from any “hobby” writing—say, you wrote a few articles that were traditionally published—you can itemize your deductions for those writing expenses, but only up to the amount of the writing income you made, and only if you use a Schedule A (the official IRS tax form to itemize your deductions, rather than taking the standard deduction). In other words, you can’t deduct expenses that exceed the income you made from writing, and if you made no income on those hobby articles (or self-published, just-for-fun ebooks), you can’t write any expenses off.
However, if you’re writing for the purpose of generating income and as an occupation, you can write off those publishing/research expenses. The Internal Revenue Code even recognizes that artistic endeavors will generally take longer to make a profit, so you don’t have to show income immediately to write off the expenses. However, the IRS will only (generally) allow up to five years of losses before red flags are raised and they start questioning your business—as in, they might audit you.*
Expenses That Can Be Deducted
So what kinds of expenses can you write off? If the expenses you incur are related to the business of writing, then they are deductible, but they must fall under the category established by the IRS as “ordinary and necessary.” It’s always best to check with a tax professional if you’re wondering about an expense that incurred and whether it’s deductible.
Examples of Ordinary and Necessary Expenses:
- Home office: A home office is a space inside your home that is used exclusively for your writing business and cannot be used for any personal business. (Therefore, the kitchen table, the couch, or your bed are not considered home office spaces.)
- Office supplies: These are items that are necessary in order to conduct business, such as computers, copiers, printers, phone, pens, pencils, paper, and ink.
- Travel: You can deduct the mileage and lodging expenses needed to travel to writing related activities, such as critique groups, conferences, speaking engagements, book signings, library appearances, and research trips. You can also deduct meals you eat out on the road (but only when you’re traveling and only 50% of the bill).
- Miscellaneous Expenses: Conference fees, books (how-to, reference, research—even novels you’re studying to better your own writing!), marketing and promotion, and domain name expenses. And especially the expenses involved in producing your book (editing, cover design, self-publishing costs, etc.).
“Proving” and Protecting Your Business
If you’re a professional writer, make sure you have a business set up. This is one of the ways you can “prove” to the IRS that are a professional. You do this by registering your business’s name as an LLC (limited liability company) or an S-Corp (a corporation), getting a business license, and completing paperwork and paying a fee to the state in which you live. When you file your taxes, you should use a Schedule C (LLC) or a Schedule E (corporation) to report your income and your losses. (Bonus tip: these business setups can also reduce your self-employment taxes, depending on how they’re set up, so consult a professional to get it right.)
You should also conduct the money part of your business with a separate bank account from your personal account. Two reasons why: it’s easier to track your expenses and your income, and it’s another thing you can use to prove to the IRS that you are a legit businessperson who is writing for a living.
Finally, a proper legal setup (please consult a legal professional about what you need) protects your business in case of a law suit or a personal financial crisis or bankruptcy—something that might be very important down the road should the unexpected strike or you achieve that fame and fortune you’re aiming for.
Do This Now
*Remember, taxes are complicated and based on individual circumstances, so you should always consult your accountant or another tax professional when you file your taxes. However, if you’re seeking more starter tips, there are some really great resources online for writers.
Speak up: Any top tips from the tax trenches other readers should know about? Let us know! If this article helped you, share away!
Lindsay Flanagan is a freelance editor, writer, and photographer. She earned her Master of Arts in English and Creative Writing and spent over a decade working in higher education before becoming a full-time editor. When she’s not editing manuscripts, she’s writing fantasy novels and poetry, chasing after her favorite bands, riding motorcycles, or photographing Utah’s majestic landscapes.
Josi S. Kilpack hated to read until her mother handed her a copy of The Witch of Blackbird Pond when she was thirteen. From that day forward, she read everything she could get her hands on and credits her writing “education” to the many novels she has “studied” since then. She began writing her first novel in 1998 and never stopped. Sheep’s Clothing won the Whitney award for Mystery/Suspense in 2007 and Wedding Cake , the twelfth book in her Sadie Hoffmiller Culinary Mystery series, won in 2014. Josi was also the Best of State winner in Fiction for 2012. She lives in Willard, Utah, with her husband, children, and a super-cute—but not very friendly—cat. For more information about Josi or her books, please visit her blog, What is a Sundial In the Shade?
Heather B. Moore is a four-time USA Today bestseller and award-winning author of more than eighty publications in diverse genres. She is the owner of Precision Editing Group and the publisher of the popular Timeless Romance Anthology series. Her websites are hbmoore.com and precisione