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IRS Tax Deductions Even Unpublished U. S. Writers Can Take
Fifteen years ago, I started writing again. From 1997 until 1999, small magazines and e-zines published my work, paying me with copies. In 2000, an agent agreed to represent me and sold my first novel to Kensington. If I could go back and do it again, I would have filled out the 1040 Schedule C (Net Profit from Business—Sole Proprietorship) to deduct my writing expenses from 1997 to 1999. Like many unpublished writers, I thought that I wasn’t eligible for these deductions because I was unpaid.
I was eligible. Sort of. Keep reading. It will become clear eventually. We are, after all, dealing with the Income Reducing Service, I mean, the Internal Revenue Service.
IRS "rules" for writers
I don’t want to confuse you with tax jargon or the intricacies of Schedule C, Schedule SE, or Form 5213. Any good tax program or tax adviser can explain those to you. I will tell you what I’ve learned:
- Writers can deduct “ordinary and necessary” business expenses for their writing on Schedule C as long as they make a profit from their writing for at least three years out of every five.
- If writers have losses in more than two out of every five years,the IRS may consider their writing a “hobby” and only allow them to deduct their expenses up to the total of their “hobby” income.
Because I’ve made a profit for 12 of the last 13 years (don’t ask me about 2007), I could have deducted my business expenses in 1998 and 1999 but not in 1997. Of course, in 1998 I didn’t know that a publisher would offer me a nice contract in 2000.
So what should an unpublished writer do? Be confident in your abilities and fill out Schedule C and Schedule SE from the start. If I had, the IRS might have flagged my writing as a “hobby” in 1997, but later I could have recouped some of my money once I started making some.
"Ordinary and necessary" deductions for writers
I’m a stickler for definitions, and so let’s define our terms:
ordinary: common, unremarkable, usual
necessary: required, essential
What, then, are the common, unremarkable, usual, required, and essential things we can deduct as writers? Instead of giving you a general list that you might have seen elsewhere, here is the actual, specific list of expenses I have either deducted or depreciated since 2000:
- Postage: postcards and press kits sent to bookstores and writer’s conferences; correspondence with my agent and editor; mailers containing signed books and self-published books sent to customers; mailers containing advance review copies of novels to reviewers; mailers containing contracts to my agent; mailers containing manuscripts sent to my editor; mailers containing proofs sent to the production editor; mailers containing books for giveaways at conferences I can’t attend sent to the conference organizers; letters sent to the Library of Congress and Blackwell’s Book Services
- Commissions: 15% of my advances and royalties to my agent, who has earned every penny
- Supplies: paper, ink cartridges, pens, pencils, notecards, Post-Its, photo paper, mailing labels, mailers, transparency paper for presentations, easels and frames for book signings, envelopes, presentation folders, flash drives, annual tax software, laptop power adaptors, laptop coolers, laptop batteries
- “Machines”: four printers (depreciated), three laptops (depreciated), one digital camera (depreciated)
- Website: domain name through Namesecure.com; monthly web hosting through Purehost.com; monthly Verizon DSL fees for corresponding with fans and maintaining my website; virus protection through Symantec/ Norton, and Trend Micro to protect my laptop and website
- Self-Publishing: 10 ISBN numbers from Bowker.com; payments to InstantPublishing.com
- Travel: costs for hotels, gasoline, tolls, meals (at 50%), and registration fees while going to or presenting at writer’s conferences, signings, and readings
- Marketing: professional photograph for first book jacket; haircuts and “outfits” for presentations and readings at universities and writer’s conferences; advertising on various websites; Amazon Advantage and Marketplace fees; gifts of books to local public libraries
- Vehicle: mileage to and from events and bookstores and even to the post office
- Phone calls: long-distance calls to my agent, my editor, and writing conference hosts
- Home office: Our guest room is my exclusive office, which allows me to deduct 12% of our total household expenses
- Licenses/Taxes: Local business licenses and taxes
I am sure there are deductions other writers regularly take, but I’m a simple man. I wish I could deduct the Irish tea I drink while I'm writing, the glasses I’ve had to buy to see to write, and Lovie, our family dog, whose barking often interrupts my writing.
If the IRS ever decides to audit me, I am prepared. I have kept all records, receipts, and spreadsheets since my paid writing career began thirteen years ago. I only wish I had filled out a Schedule C back then so I would have enough money now to purchase yet another printer to abuse.