Well, I really don’t want to talk about death, although I am in the process of being an executor for a friend’s estate who passed away a few months ago, and trust me – death does not alleviate one’s obligation to pay taxes.
I do want to remind everyone out there that it is tax time and with that all writers need to be aware of their tax profile and/or footprint. Regardless your status as a writer – published/unpublished, traditionally published/self-published – at a minimum you have record-keeping requirements. I say this because I meet so many writers who are yet to be published who do not keep track of their expenses or time spent in pursuing their writing. They say that they aspire to be published some day but for now they are just trying to finish their first novel.
This is all well and good but when a writer does become published or just simply receives any kind of compensation for their writing - whether it’s a novel, a blog, a newsletter, reduction in fees for presenting at a conference, etc. – there can be tax consequences for the writer.
There tend to be two major challenges for most writers starting out and the first is determining if their writing is a hobby or a business; and the second is if the writer wants to be considered a business, when to start that business and how to reflect that on the writer’s income tax return.
I am a big fan of encouraging all writers to keep detailed records of all expenses and activities related to their writing even if they are yet to be published. I’m also a fan of all writers setting aside time for tax planning, again regardless of their publishing status, because when a writer is finally published, or receives a contract to be published, there are all kinds of tax consequences and options that become available to the writer whether they consider themselves a hobby or a business.
So, to get started on at least the record-keeping aspect of taxes, writers should visit the Internal Revenue Service site at www.irs.gov and review the following IRS Publications, Forms and Instructions:
- Publication 334, Tax Guide for Small Businesses
- Publication 535, Business Expenses
- Publication 538, Accounting Periods and Methods
- Publication 583, Starting a Business and Keeping Records
- Form 1040 (Schedule C)
- Inst 1040 (Schedule C)