Tax Time Toolkit: An Authors Guide to Tax Season - Are you prepared to file your taxes?
DISCLAIMER: I am not, nor have I ever been, an accountant or tax professional. If you are an author and your role as an author is your primary means of income, you should contact a professional to ensure your taxes are properly handled. This blog only provides advice based on my experience and research as an author/publisher. Denola M. Burton
When you decide to write, publish and sell your book, you may need to consider what the tax implication may be – especially related to the income that you make as an author. I won’t focus on the “how”, more so on the “what”. Here are some things to consider:
EXPENSES
Just like any other business, you can deduct expenses related to your “author” business. Yes, I view your role as an author as a business. Whether you have large or small sales, you are earning money when you sell books which could qualify as a business. To that end, you can deduct expenses related to the writing, publishing and marketing processes for your book. The important thing is to keep receipts or use a tracking system that tracks your expenses as you create them. These receipts are crucial for providing documentation of your expenses when you file your taxes. Here is a list of the things to consider related to expense tracking:
Office supplies and equipment including computers and software (and if you work from home, you may be able to claim a home office deduction)
Workshops or conferences you attend to learn about the writing process
Travel expenses and meals
Publishing costs (editing, formatting, cover design, etc.)
Book purchases for sale, shipping and postage
Legal and professional fees and memberships, etc.
INCOME
Whenever you do work for a person or company and get paid, even if it’s just writing a short blog post or proofreading a manuscript, you should always fill out a W-9 form. This makes sure that the company you’re freelancing for has your tax information on file. If they pay you more than $600 in a year, the company is supposed to send you a 1099-MISC form, which lists exactly how much they’ve paid you. Note though, even if a company doesn’t send you a 1099, you are obligated to report what you earned on your taxes.
Time Saving Tax Tip: You can fill out a W-9 form once each year using the IRS’s PDF W-9 form, save that file on your computer in a tax-related folder, and then send the same W-9 form to each company that pays you. This little tip will save you a bunch of time so you don’t have to keep filling out the same form over and over.
Here are some examples of the types of income you should track:
Royalties from book sales (even if you sell them direct to consumer)
Speaking, teaching or writing fees
Literary grants or awards
FILING TAXES
As an author, you will receive a 1099 form from any company that paid you more than $600 during the calendar year. This form reports income and earnings to the Internal Revenue Service (IRS) and must be reported using a Schedule C (Profit or Loss from Business) form as a part of your annual tax return. Note: Distributors such as Amazon will provide a summary of your income, so be sure to check your reports.
According to TaxAct, 6 Tax Tips for a Self-Published Author, “You must report at least as much total business income as shown on all the 1099 forms you receive. You must also report income from book sales regardless of receiving a Form 1099. For example, if you sold books for cash at an outdoor market, you should also report that income. Even if you received less than $600 from a publisher, you should still report any income you made, no matter how little”.
Please remember that this blog is meant to be a guide for your considerations and not based off tax law. You should always consult with a tax professional or the IRS for advice specific to your business or role as an author. Every author’s business and situation is unique and what works for you may not work for another author. Overall, authors should be proactive in managing their tax obligations by keeping thorough records, understanding their tax liabilities, and seeking guidance from qualified tax professionals when needed. Staying organized and informed can help authors navigate the complexities of the tax system and ensure compliance with all applicable tax laws and regulations.
With a little preparation and good record-keeping, doing your taxes as an author doesn’t have to be a headache!
Denola M. Burton is the Founder and CEO of Enhanced DNA: Develop Nurture Achieve, LLC and Enhanced DNA Publishing. Through Enhanced DNA, Denola develops and nurtures individuals and organizations to achieve their Leadership, Communication and Performance goals and objectives. Denola is also an author and publisher and through Enhanced DNA Publishing, assists new and newer authors in publishing their books according to the standards of the Independent Book Publisher's Association (IBPA). Denola retired from Eli Lilly and Company after 27 years where the majority of her career was focused on Employee Relations/Human Resources. Interested in becoming an author? Check out Denola' s award-winning book, Enhancing Your Author DNA: Step-by-Step Publishing Guide.
You can connect with Denola on Facebook, Instagram and LinkedIN Enhanced DNA or send a message to DenolaBurton@EnhancedDNA1.com.