Book Beat Babes

Book Beat Babes

Saturday, March 4, 2017

It’s Tax Time – Do You Know Where Your Expenses Are?

It you’ve already downloaded and read the Schedule C (Form 1040) and related instructions then you know there are quite a few categories for your writing business expenses.  You should also note that some of those expenses refer to you to additional forms and/or instructions, which means that not all expenses have the same tax treatment.

Of particular note is the difference between an expense such as consumable supplies (generally used up or expended in a year) versus items that last more than a year.  This is a very important concept in the tax code because items that tend to have a long life generally must be depreciated over that expected life.  So, items such as computer systems, furniture, etc., will typically be depreciated and the tax code has charts and classifications to help you figure out the useful life of these items.  For more information, including the charts, see IRS Publication 946, How To Depreciate Property.

Where it becomes a little dicey is when you have an item that can last several years that has a very low cost, such as a stapler or inexpensive software.  What you will need to do in these cases is develop a written policy stating that such items under a certain dollar amount (typically a very low dollar amount) can be expensed, but make sure you read the tax code carefully or consult with a professional to make sure you adhere to any exceptions and stated requirements.  Remember that the tax code, at both the federal and state levels, is written based on laws passed by the legislatures at these respective government levels.

Typical consumable expenses that a writer might incur include paper, toner cartridges, pens, paper clips – you get the idea, don’t you?  Typical items for depreciation include computers, furniture, vehicles (unless you take the standard mileage rate), printers again you get the idea.

There is a mechanism for accelerating that depreciation into the current year or what is referred to as Section 179 but be careful because if you accelerate depreciation, say on an asset that is considered to have a life of five years, but then decide to stop your writing business after only three years, you then have to recoup the depreciation for the two-year difference.  Additionally, any property accelerated under Section 179 must actually qualify as being on the list of eligible property so, again, read everything very carefully and when in doubt consult a professional.

Friday, February 24, 2017

It’s Tax Time! Are You a Hobbyist or a Business?

When most of us strike out to be a successful writer we think of all things writing such as:

-          Traditional vs. Indie publishing
-          Do we need an agent
-          How to engage readers
-          Finishing the Damn Book
-          …and more

What we don’t typically thing about are the tax consequences of that journey to becoming a successful writer.

One of the first things to determine, especially in the beginning, is whether you are conducting your writing as a hobbyist or a business.  If you limit yourself to just writing and don’t incur any expenses and/or earn any money in your writing journey then the question is somewhat mute, although, if you are incurring expenses do keep a written record of them so that you can consider them later, potentially as startup costs.

To be considered a business, you have to have – and be able to demonstrate – a serious intent to make a profit.  This is detailed in the Form 1040 Schedule C and related instructions found at the two links below:

If you don’t care whether or not you make any money with your writing but just happen to, along the way, receive money for your efforts then you fall into the category of being a hobbyist and the way you reflect your income and expenses is explained in IRS Publication 529:

But be careful!  You can’t pretend to be a hobbyist just to avoid certain taxes such as the Self-Employment taxes and this is spelled at the following IRS link:

So, if you want to know if your writing journey is a business or a hobby, use the link above to see if you pass or fail the test of being a hobbyist, and definitely read the Schedule C and related instructions.

Thursday, January 26, 2017

Grabbing Time To Write! by DL Larson

In the last five years, my goals have shifted. I still write, I still pursue my writing career, and if I can scratch enough time together, I may even get a book published this year. But my life is busier than ever. Here are a few reasons why my goals have changed ...

My grandkids!!!
We're at an apple orchard in the above picture. We spent the day playing in a corn crib, on a bouncy trampoline, racing through a straw fort, and we enjoyed yummy apple donuts and cider. I came home exhausted, but had renewed energy to write the next day. Their energy depleted mine, or so I thought. Yet the next day I was eager to be at the computer to work on my WIP. I don't ever want to be remembered as the grandma who didn't have time for her grandkids. My goal to write on my day off is not set in stone anymore.

Our entire family spent the day at Brookfield Zoo, after Christmas. Cold and beautiful. We had never visited the zoo in the winter. What an exhilarating experience. Our four little wild ones kept us moving and seeing more, more and still more.

These two pictures are of my older grandkids! They are tall, beautiful, young women now. They are extremely athletic and play sports year 'round. Sometimes more than one sport in a season. I've learned that bleachers feel pretty much the same whatever sport I'm watching. I try to make as many games as I can. And that's saying something when there are a couple games each week.

I always thought when I got older, I'd have more time to write. I'd have more time to market my books. I thought I would ... I thought I would ... but I've learned in the most beautiful way, that families tend to grow. Growth is a beautiful thing, a busy thing, an exhausting thing. And there is no such animal called spare time. I have no spare time. I actually never did. But I have learned over time, I must grab the time and make it my own if I want to write.

So this is my extent of writing for today. I'm off to pick up my father and take him to a basketball game where my granddaughters are playing. We'll sit on bleachers and cheer on our team. I had hoped to get the last of my editing done today, but that didn't happen.

I'm determined to grab a few hours to write tomorrow.

Wish me luck!

'Til next time ~

DL Larson