What the heck? I’m writing about taxes and it isn’t April? Clearly I’m violating a code. According to the media, no one thinks about taxes except in April.
Right. You can bet the IRS thinks about them an awful lot, which means you’d better think about them, too. Especially since we’re over halfway through the tax year.
Before we go any further, let me state categorically that I am not a tax attorney, accountant, or IRS agent. My advice is from one laywriter to another.
If you make money as a writer, you have to pay taxes on it, and the percentage is annoyingly high. You’re self-employed, meaning you have to pay taxes that employees pay AND ones that employers pay. You also need to file estimated taxes quarterly, though you don’t have to file in a given quarter if you didn’t make anything. No one will check with you to make sure you meet the deadlines–it’s your sole responsibility. The IRS web site has detailed information on how to do this. One service the IRS does provide is that they’ll send you a set of quarterly forms to fill out for the following tax year once you file a return with a freelancer’s income on it. Isn’t that nice of them?
Here’s the interesting part: as a writer, you can deduct an awful lot. Legally. Any expense related to your writing counts as a deduction. Some of these (completely legitimate) deductions include:
–convention registration fees, hotel, travel costs, and 50% of restaurant costs
–mileage to and from any writing-related trip (to the library for research, to a writer’s group meeting, to meet with an editor, to the office supply store to buy writing-related supplies)
–gifts you buy an editor or agent (including that round of drinks you bought at DragonCon and that time you took that agent out to lunch at ConFusion)
–any costs related to research, including books and magazines (since you need to read in your field in order to keep up with the market) and research-related trips you take, even if they’re overseas
–computer equipment you use for writing
–Internet service, if you use the Internet for writing-related business or research (and frankly, it’s almost impossible to be a writer these days without doing so)
–web hosting fees for your author web site
–your cell phone bill, if you use it for business
–the portion of your house that you use for office space (this one does get tricky, and is easiest to handle if an accountant does your taxes); this includes a portion of your utility bills, since your business requires heat, electricity, and water
–postage for mailing anything writer-related
–dues to professional writer organizations
Every year by January 31, every publisher (or magazine) who gave you money has to send you a 1099 form. This is a W-2 form for self-employed workers, and it just says how much money they paid you. A copy went to the IRS, too, so everyone involved knows how much you got.
I’m absolutely anal about my paper trail. I keep every receipt, every scrap of paper, every mileage journal. I have a set of folders, each one with its own label: Research, Travel, Gifts, Computer, Utilities, and so on. When I get a receipt, I drop it in, and at the end of the year, I tally everything up according to category and I’m done. I used to do my taxes on my own, but once I got a mortgage and adopted two children, my taxes became insanely complicated, so now I gladly pay an accountant to do so. However, he charges by the hour, so it behooves me to keep everything categorized and do the simple addition myself so he can concentrate on the number-crunching.
Okay, everyone–what’d I miss?
–Steven Harper Piziks
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