This article was originally published on this site in January 2015, but I have updated it since I’m now going to include a recent episode of A Writer’s Journey podcast in which my co-host, Terrance Zepke, and I discuss tax issues specific to writers. Regardless of when you find this article or hear this podcast, it’s never a bad time to think about organizing your receipts and establishing yourself as a professional writer if you intend to publish and market your work.
Let me say right off the bat, I am not a tax professional. As such, in this article I am in no way pretending to dispense advice about what to do given your unique business status and tax situation, but I am happy to tell you the sorts of things that you can consider if you are genuinely trying to build a profitable writing business and save money on your taxes while you’re at it.
This spring, my novel, The Smuggler’s Gambit, made its debut. The book is being sold through various outlets, which means now I can hopefully start to recoup some of my publishing expenses (like buying ISBNs and hiring a copy editor), but regardless of how successful it is, it was still written, edited and polished for the purpose of marketing and selling it. That means that any money I make on the book is business income, and any expenses I had last year related to honing my craft as a writer, or getting my book ready for publication, are legitimate business deductions.
Fortunately, I made sure to keep track of all of my writing business-related receipts last year so that I could include those expenses on my 2014 taxes. You’d be surprised how it all adds up.
Here are examples of some of the expenses writer’s commonly have:
If you make any trips (such as to a writing conference, speaking engagement, or something else specifically related to your book, such as research) save your receipts. Some examples are:
- Conference fees
If you drive for something related to your writing business, keep a record of your miles in a notebook or file so that you have documentation come tax time.
As a writer, the tools of your trade are tax-deductible.
Some examples might be:
- Writing software (like Word or Scrivener)
- Pens, pencils, highlighters
- Notebooks and journals
- Index cards
Business and Marketing Tools
- Computer used for writing and managing your writing business
- Software used to manage your writing business (such as Quickbooks or other accounting software)
- Dropbox or other cloud computing subscription – You want backups of your work! Don’t just save them on your hard drive.)
- Domain name(s) – You might have one for your personal writer website, another for your publishing company if you are indie, and yet another for specific book titles (if you choose.)
- Web hosting – You’ll need a way to host those websites. GoDaddy and HostGator are both good options.
- Postage – This can add up when you send out copies of your manuscript to beta readers.
- Mailing Supplies
- Photocopies – If you’re doing research at a library or archives, you might need to make photocopies of relevant information found in reference books.
Professional Services and Fees
You might not need these if you’re publishing traditionally, but if you’re a fellow indie author like me, you’ll need at least the first two on this list.
- ISBNs and barcodes from Bowker
- Editing services – If you’re publishing independently, it’s worth it to hire one or more editors depending on the services you need.
- Book cover design – If you’re skilled with graphics software, you might not need this service. If you’re not, while you can use a free cover designer like the one on Amazon, you might find it’s worth it to just hire a designer to create a cover for you.
- Book layout design – Hopefully, you won’t need to hire someone to help you with this, but if you do, just know this could be a deductible expense.
- Website design
Honing Your Craft
Any books, videos, software or training you purchase to help you become a better writer or to manage your writing business could be a deductible expense.
- Writing how-to – These might be books about outlining, character development, improving dialogue, novel structure, building suspense into your story, writing a novel in a month, etc.
- Marketing books – You need to learn how to sell what you’ve written. There are countless books that can teach you what you need to know, and they are legitimate business expenses!
- Reference – Style books (like Strunk and White), thesauri, dictionaries
- Research – I write historical fiction, so for me, research involves studying up on mid-18th century history, smuggling, shipping industry, lifestyle, etc. If you’re writing a story that takes place in medieval Europe, any books and films you use for researching the era could be deductible expenses.
- Online training – I’ve never done any online training, but I know there are ample opportunities to learn all kinds of things via your web browser. One training opportunity that springs to mind is LearnScrivenerFast with Joseph Michael.
If you start planning now and keep good records all year, you’ll be glad come next year when it’s tax time. You’ll have all of the information necessary to deduct your business expenses and report your business income. Believe me, it’s a lot easier than trying to scramble several months after the fact to try and remember all of the sources of revenue and expenditures.
2014 Tax Filers: If you did save your writing business-related receipts for 2014 and intend to write for profit, it would be worth it to do some research and talk to your tax professional about whether or not you can include those expenses on your taxes this year.
The most important piece of advice I can give is to make sure your tax returns are accurate. A lot of people worry about being audited by the IRS, but it should be no cause for concern if you have reported everything as you should.
Regardless of whether you can make use of any of the information from this article this year or next, I wish you the best for your writing business in 2015!