It's that time of year again: Tax Season! In honor of this (in)asuspicious occasion, I'm bringing up some tax advice that I have picked up from various conventions and doing my own taxes as a writer for five years now.
In writing, as in many things, there is no getting away from the absolutes: Death and Taxes. The good news, such as it is, is that writing can have a number of perks, chief among them is making you a bit of money. The bad news, of course, is that you'll have to pay taxes on that money.
Even if you're not earning money on writing just yet, your writing can save you a bit come tax season. Writing, so long as you are making a sincere effort at publishing or getting published, is a business. As a business, you can take deductions from expenses common both to general writing and genre fiction. Those deductions can really start to add up and can be a real benefit when you go to file your taxes, hoping to get a little bit more money back.
If, like me, you've earned money writing, those deductions can help you to keep a little bit more. As a business, you need to keep track of receipts, invoices, and other expenses. That part can be the most frustrating, particularly when you return from a convention tired, travel-lagged, and of course with a case of the con crud. Still attention to detail here can save you a lot of money when it is time to file those taxes.
The big thing is to know is what you can and can't deduct. Remember, this is the fun part because deductions are expenses that drop your earnings so you pay fewer taxes. There are a lot of viable areas for business expenses that you can deduct. Attending conventions, both writing and genre is a networking and educational event. The convention fees, hotel room charges, and even your meals are tax deductible. If you're attending conventions, you also probably have business cards or some other means of marketing, these too are tax deductible.
There's more than that, though, Your travel to and from the convention is deductible, both in whatever mileage you drive (keep a record of miles you drive in your car for such events), as well as airline, train, or bus tickets. That new computer you had to buy, that's deductible, though you may have to depreciate it because it's something that should last more than a year. If you've bought Microsoft Office, that's a tax deduction too, as you need it to do your writing. Most meals for business are only 50% deductible, however, that's still 50% that comes out of your taxable income.
If you're meeting with an editor or artist over lunch to do your cover design or illustrations, not only is the travel to the location a deduction, so is the meal. So, in fact, is the expense of the editing and the artwork for the cover. Any kind of entertainment meals are 100% deductible, so keep a log of what is just a business dinner and what is entertainment. Any time you conduct business during the meal or the discussion is going to take place immediately before or after, you can consider it an 'entertainment' expense and you get the 100% deduction.
There's also deductions you can take towards research that you do as a writer. If crucial scenes in your book are set in a specific location, travel to that location as well as any expenses towards researching it are deductible, within reason, of course.
All these deductions can add up and that's important because, as we'll see later, as an author, you are self-employed and you'll have to pay more taxes, the Self Employment Tax, on top of what you would normally pay.
So, save those receipts and try to save as much of that hard-earned writing money as you can!
In Part 2, we'll look at how you are categorized in your taxes as a writer.