Are you a writer or a business, or both?
If your answer is both then you need to know your MP or material participation number.
Because, in order to be considered a business by the IRS and your state taxing authority you need to prove that you are conducting yourself as a business.
So, how do you do that?
Well, one measurement is the number of hours you spend dedicated to your writing with an intent-to-make-a-profit (or IMP), and for the IRS and the rules associated with Schedule C (Form 1040) that magic number is 500. So start calculating.
Now, that’s 500 hours a year. Think about it – that’s basically 10 hours a week if you allow for a two-week vacation, and when you consider everything that writers do, 10 hours a week isn’t difficult to substantiate.
The actual act of writing of course is critical to your success as a writer but so too are the acts of promoting your written product, research, purchasing supplies, attending writers conferences and group meetings, networking, promotional activities and so much more.
I’ve consistently recommended, as most of you know, that all writers keep a record of all their activities associated with their writing. This can be a log, a journal, a calendar, whatever method proves easiest for you to keep track of all your efforts to write and to promote, and therefore sell your written product. To find out just how this looks, not only in the current year but also over time, it’s important to review the instructions for Schedule C (Form 1040) provided by the IRS at www.IRS.gov.
Now MP is only one of the tests to prove you are a business according to the IRS and next time we’ll look at the concept of regular and continuous behavior related to proving you are a business.