Saturday, February 14, 2015

Taxes for Writers

I posted this at Travels with Kaye last week, but I feel it's important for writers to know these things if they don't. So I'm repeating it here in hopes that more people will see it. If you're a writer who is wondering what to do about taxes, here are some excellent links to guide you through the jungle.

The biggest problem is the pesky hobby rule, often misunderstood by writers and CPAs alike. Some writers, even a lot of tax accountants, think the IRS hobby rule applies to writers. It doesn’t have to, if you’re serious about your writing.

To begin with, take a look at this IRS publication:,,id=186056,00.html
If you’re starting out as a full-time writer, you don’t have to declare income 3 of the last 5 years if you satisfy some requirements.

The important points for you, as a beginning writer (not making any money), from this article are:
  • Does the time and effort put into the activity indicate an intention to make a profit?
  • If there are losses, are they due to circumstances beyond your control or did they occur in the start-up phase of the business?
  • Do you have the knowledge needed to carry on the activity as a successful business?
  • Do you expect to make a profit in the future from the appreciation of assets used in the activity?

You can report losses on a Schedule C for quite a few years before the IRS will take a look at you. See this article, which elaborates on the above:

This link gives some checkpoints to make sure you’re fulfilling the requirements:

You can see that it’s important to be keeping records of submissions, classes, time spent, and to conduct writing as a business in every way you can. Also, of course, keep track of what you can deduct.

This article goes into exquisite detail:
This one includes some forms to help you keep track if you don’t already have some that you like:

I hope this helps. Don’t lose out on loss deductions that you’re entitled to. And may you someday be declaring a profit! I did last year for the first time in 12 years. It was a small 3-figure profit, but maybe someday it’ll be more.


Linda R said...

Thanks, Kaye! This year I'm determined to deduct all writing expenses. I have never done so in the past.

Kaye George said...

You're welcome! The trick, for me, is to keep track of them all year long. I have finally hit upon a method that sort of works. I throw all my receipts into a hanging folder. Then, at tax time, I take each one and file it in a folder under the type of deduction it is, also putting it on a spreadsheet. I always intend to do this monthly, but that never happens!

Marilyn Meredith a.k.a. F. M. Meredith said...

Good advice. I used to write notes on the form tha said, "I write 5 days a week at least 4 hours each day." I've never been audited and my expenses far outweigh my income, even now.

Kaye George said...

I talked to an IRS tax agent once and she said she got those notes from writers and loved getting them. It added something personal to all the forms, she said.