Taxes may be one of the least-talked-about but most-important topics for writers – both published and aspiring. I'm surprised at how many unpublished writers don't realize they could be deducting some of their writing expenses from their taxes. According to the IRS: "For the expenses to be deductible under IRC §§ 162 or 212, the taxpayer must engage in or carry on an activity to which the expenses relate with an actual and honest objective of making a profit." (Italics mine.)
If you are seriously pursuing your writing, with the intention of making a profit, you're entitled to deduct expenses associated with that pursuit from your income taxes. Examples of expenses you might deduct:
Membership in writers' organizations
Attendance at conferences, including conference fees, mileage or airline ticket costs and part of your meals.
Cost of writing books and magazines
Cost of books in your genre
Costs associated with building and maintaining a website.
They key to legitimizing these deductions lies in good record-keeping, not only of the expenses themselves, but of your efforts to make a profit at this writing business. Save all receipts and note on the receipt the writing related nature of the expense. For example, a note on the receipt for postage might read "Submission to XX Publisher."
Keep a notebook in your car and jot down the beginning and ending mileage when you make writing-related trips, whether to your critique group, writer's meeting, or to the post office to mail a submission.
You should keep a log of submissions to publishers and agents and copies of rejection letters. (Yes, those rejection slips do have some value!) I suggest you also keep a log of the time you spend writing each day. Get a 2012 calendar and make a note each day of how many pages you wrote or how much time you spend writing. Not only will this prove useful should you ever be audited, it will open your eyes to exactly how much time you're really putting in at your craft!
To take your writing-related expense deductions, you'll complete a Schedule C: Profit or Loss From Business. While you can use tax software to help you through this, I strongly recommend consulting a tax professional, at least the first year, in order to make sure you're maximizing your deductions without violating the tax code.
Once you begin making money from your writing, you'll need to pay quarterly taxes, including social security taxes. You may also want to deduct expenses associated with having an office in your home. A tax professional can be a big help at this point, too.
Cindi Myers is not a tax professional, nor does she play one on TV. She has, however, been a full-time writer for 15 years and is the author of more than 40 published novels. Her most recent release is The Woman Who Loved Jesse James. Find out more about her at http://www.cindimyers.com or http://www.romanceofthewest.com