Any writer, writing to gain an income is able to write-off certain expenses on their yearly taxes. There are stipulations, but if one adheres to the rules and regulations, one might find that they can save some money on April 15th.
WHETHER YOU ARE PUBLISHED OR NOT
I’ve heard a lot of new unpublished writers say that because they aren’t published they do not have the ability to write off expenses. Incorrect. IRS regulations state you can claim a loss for business expenses even if you are unpublished. When filing your taxes use a Schedule C as part of your 1040.
MUST SHOW PROFIT vs. PURSUING A CAREER
Some CPA’s will say writers must show a profit within three to five years. While others say that if you can prove you are pursuing a career as an Author, expenses are deductible. My advice would be to talk to your CPA to see what the best course of action is for you.
WHAT IS DEDUCTIBLE
While most general office products are considered legit, paper, pens, printer ink, envelopes, and stamps. There are also other expenses that are considered business expenses for a writer.
Writer conference dues for example, as well as meals, gas, airfare, and hotel fees for the conference are also tax deductible. Membership dues, meals, and gas mileage for writer groups are deductible as well. If you have a website, all fees associated with the creation and maintenance for the website can be deducted. Research trips combined with family vacations, however, can be tricky. If the trip is predominantly business than it can be deducted. But if the trip is predominantly vacation, than only the expenses related to the business would be accepted.
Meals are only deductible by 50% and the meal must be for business conversations, i.e. meetings with agents, writers, editors, or publishers. If keeping track of receipts on the road is difficult, you can consider the IRS Per Diem. Adjusted annually by the IRS, per diem ranges from $46.00 to $71.00 a day, depending on the location.
When computing mileage, use the IRS standard, which for 2011 is $.51 per mile. Mileage for purchasing office supplies, attending meetings and conferences, as well as driving to promotional events, libraries, and research trips count.
And lastly, travel and expenses for spouses and children are not allowed to be deducted unless they are employees in your business.
For published Authors, any promotional brochure, flyer, or press release. As well has any books purchased for promotional events. Book tours are deductible and any expense incurred for the book tour.
KNOW YOUR LIMITS
For the most part writers can have deductions that the IRS would consider personal expenses. Those expenses can cause them to really look hard at your tax return. Keeping check on what you deduct and what really was a business expense is essential. Remember to keep everything within reason. Not all of the books you buy are going to be for research, as well as all movies, concerts, CD’s, and DVD’s. Trying to write off a boat, so you can water ski while writing a “How to Water Ski” book is not going to be tax deductible.
HOME OFFICE DEDUCTIONS
IRS rules state the home office must be used regularly for your business needs to qualify as a deduction and must be a specific room. In cases where the space is in a larger living area, the space for business must be sectioned off. When filing your taxes use FORM 8829.
EQUIPMENT
Equipment such as computers, printers/scanners/fax/copiers, desks, and chairs must be depreciated and written off over a period of five to seven years. When filing your taxes use FORM 4562.
KEEP TRACK OF EVERYTHING
Make certain that not only to you have a spreadsheet (or hand-written record) of all business expenses as well as receipts for each expense. Whether you separate them to category or month is your choice. However, just make certain you keep track of every penny. Being well organized and kept on top of is only going to make your tax filing simpler. For help in learning what to do for record keeping see Publication 463.
**Remember this article is not intended for anything more than suggestions. The best decision you can make when questioning what you can and can’t deduct should be to ask your CPA or tax professional.**