Writers have always received more deductions that most free-lance or self-employed workers. There’s one more deduction for writers this tax year, effective for the 2018 tax year.
Let’s start with the write-offs we’ve had before. First, though, let’s talk about the one non-negotiable point with the IRS. They want to make sure you’re serious about writing. It’s not a hobby. You really are making money with your writing or plan to do so. That means you’re published. Of course, in today’s world, publishing is a click of your mouse away with online services like Amazon. They’ll publish your digital book and even do a print on demand for your print book. In the end, you actually make a lot more per book then you ever would with a regular print publisher when you use a service like that.
And voila! You’re now published. Put a marketing plan behind it and maybe join a Facebook group like 20 Books to $50K, who have a lot of case studies showing that people who follow their free advice can actually turn 20 books, written and promoted like they suggest, into a sustainable $50K per year income.
But, for this blog, we’re going to concentrate on tax deductions for your writing business. Make sure you have a business in the eyes of the IRS.
Regular business deductions will apply. For example, if you operate your writing business just in your own name, you will file a Schedule C, Sole Proprietorship return. The expenses that you have that could be considered “ordinary and necessary to the production of income” (the IRS’s phrase) will be legitimate deductions. That could include home office expense, cell phone, computer, software, ISP, business meals (50% deductibility) and office furniture.
Also, and this is big one, your research expenses is deductible. For example, I have written and published many books about taxes, businesses and real estate. I’m a published author who makes money selling books. I could decide that I want to write a book about being an expat in France or maybe a cookbook from Italy. It doesn’t HAVE to be the same genre I write in, but I do need to show that I do research and from that, I occasionally produce books which create income for me.
The expense of travel and lodging in France (for the expat book) or the expenses for Italy (for the cookbook) would be deductible. It’s all research and it’s all deductible. If I write a book about yoga (not likely), I could take a deduction for my research about yoga. The key is to keep the expenses reasonable and keep writing!
The new 2018 tax deduction has to do with a brand new 20% income deduction.
If your taxable income is below the income threshold ($315K for married, filing jointly or $157.5K for single), then you can take a 20% income deduction based on the net income from your business. That includes your writing business.
The taxable income threshold is your total income, not just from that business.
So let’s say you’re married and your total taxable income is below the income threshold. You made $50,000 in net income from your writing. You get a deduction for $10,000! Not bad.
If your taxable income is above the income threshold, you still may get some or even all of the income deduction. Check with your CPA regarding how that would work.
Bottomline? Writing pays and it can also mean you pay less tax.
Not a bad deal at all.
If you want more information regarding taxes and your writing or other business, please join me at my Facebook group, Diane Kennedy’s US Tax Group. See you there!