Tax Deductions for Writers by Donna Goodrich

Whether we like it or not, it's that time of year again when we need to gather up those receipts and deposits that prove our writing expenses and income. Today, author Donna Goodrich gives us a list of various allowances available for writers. -- Sandy

Donna: As a writer, you’re considered a self-employed person, and thus you will have to show all your income on a Schedule C. However, to offset this income, you can take the following deductions. NOTE: Even if you have a CPA or other professional prepare your taxes, it’s up to you to keep good records using Quicken or another program that works for you.

• Advertising (business cards, brochures, fliers)
• Bad debts (if someone has owed you for more than two years, and you can show proofof trying to collect it.
• Car expenses (can take actual expenses prorated, or mileage deduction allowed by IRS. Keep track of all your miles—anything connected with writing.
• Commissions—agent, etc..
• Depreciation—office equipment that cost over $100 and is expected to last over a year. (This can be taken over several years or all the first year.)
• Insurance—on rented office; or if you have an office in the home, you can take a portion of theinsurance.
• Interest—credit card used solely for your business, i.e., office supply store or airline.
• Legal & professional expenses—portion of tax preparation re: self-employment; if you pay someone to look over a contract, or to try to collect money owed you.
• Office expense—anything you do to your office, i.e., decorating, repairs (carpet, drapes), etc.
• Rent or lease—business equipment. However; if you end up buying the equipment then you may have to go back to the first year and show depreciation for the time you had it.
• Repairs and maintenance—repairs on your equipment, or a maintenance agreement.
• Supplies—office supplies (buy two sets—one for business, one for household).
• Taxes and licenses—related to your business.
• Travel—plane tickets, rental cars, cab fares, parking fees, tolls, etc.
• Meals and entertainment—taking a writer to dinner, baseball game, concert, etc., or your own meals if you stay overnight.
• Utilities—for a rented office, or if you have an office in your home, you can prorate your utilities.

(The above deductions are placed line by line on your Schedule C. Those listed below are miscellaneous deductions that go on Part V—Other Expenses. You may have more. These are just some I deduct every year.)

• Postage
• Telephone (landline only if you have a separate business line. Otherwise, you can deduct such things as Call Waiting, conference calls, long distance calls, cell phone [prorated] and don’t forget your Internet fees.)
• Books and publications—magazines you buy at newsstands or subscribe to for possible markets, or a newspaper you take solely for business.
• Printing and copies
• Cards and gifts
• Bank charges
• Camera/tape recorder (prorate if you also use them for personal use. Don’t forget repairs.)
• Subcontracting—If you pay someone to type or do research
• Dues for business clubs
• Loss—I sometimes have a loss on books sold 

If you have a home office, you can also prorate deductions on such things as landscaping, repairs (air conditioning/heating), exterminating, carpet cleaning, real estate taxes, interest and house insurance, plus depreciation. This gets sticky, so talk to someone before deducting a home office.

The Bible says to “Render therefore unto Caesar the things which are Caesar’s; and unto God the things that are God’s” (Matthew 22:21 kjv). Filing your income tax is required by law, but why pay more than you have to? Keeping good records and deducting what the government allows will help you be a better steward of the income you’ve received by spreading the gospel though the printed word. 

Have you found legitimate deductions to add to this list? Will you share your favorite method for keeping records.

~~~~~

The author of 24 books and over 700 published manuscripts, including A Step in the WriteDirection—the Complete How-to Book for Christian Writers, Donna Clark Goodrich lives inMesa, Arizona, with her husband Gary. Also a freelance proofreader/editor and speaker, she enjoys helping beginning writers get started and encouraging advanced writers not to give up. Contact her at dgood648@aol.com or www.thewritersfriend.net. She also blogs every Monday at: http://donna-goodrich.blogspot.com

Which Tax Deductions Apply to You as a Writer? By Danica Favorite

I don't want to depress you on this first day of the new year, but if you're like me, you're already thinking about all those receipts and spending records from the past twelve months. Today, I'm rerunning a popular post from 2013 by Danica Favorite. Hopefully, the information helps you as you prepare for the upcoming tax time. -- Sandy

Danica - There are a lot of legitimate deductions a writer can take for his or her writing business. But there are also a few deductions writers take that aren't deductible. I'm going to share a few of the most common.

The first thing I want to address is what you CAN deduct. The IRS standard for what is deductible for your business is what is REASONABLE and NECESSARY for your business. So what's reasonable and necessary? That's something the IRS does not define, but as a business owner deducting that expense, you should be prepared to explain how it's necessary for your business as well as a standard business practice among writers.

Here are a few suggested items you might be able to deduct:

·         Ink, paper, mailing supplies, and other office expenses.

·         Research materials

·         Conferences and other writing related education

·         Professional memberships

·         Advertising

·         Transportation Expenses

·         Meals and Entertainment

·         Business gifts

·         Legal and Professional Service

·         Other writing tools

·         Utilities

·         Computers and other equipment. NOTE! These should be depreciated and only in the proportion of business use. Care should be taken to determine the amount, if any, personal use can be attributed to these items

One thing I'd like to point out as a commonly missed deduction are your transporation expenses. When you take trips to the post office to mail things related to your writing business, or you're going to meet another writer for critique, be sure to track your mileage!

As far as deductions that people think are legitimate but aren't, I'm going to give the most commonly abused deduction by writers (at least in my experience). Business clothes. Unfortunately, the IRS has very specifically stated that the business clothes you're buying to wear to conferences are not deductible. A lot of writers try to claim it, but it's not legitimate. I know some writers have said, “but I claim business clothes every year.” But there's a problem with that logic. If the IRS chooses to audit those returns, that deduction will be disallowed, and the writer will be responsible for paying penalties and interest on the additional tax levied based on that mistaken deduction. Remember- just because you've deducted something, doesn't mean that it's a legitimate deduction. Even if you've gotten away with it in the past, the IRS has the right to take a look at previous years' returns and change them.

Another deduction mistake is taking a deduction for the entire cost of an item that is used for both personal and business expenses. For example, many writers want to deduct the cost of their Internet service. This is a legitimate business expense. However, if you have the Internet service in your home, and the rest of your family uses it, then part of it is personal use. So you need to apportion the amount of business use and only deduct that amount on your tax return.

As you can see, there are a number of great deductions you can take for your writing business. Just remember that they need to be reasonable and necessary for your writing business. Keep in mind that you need to only deduct the business portion of your expenses, and be cautious about deducting anything that the IRS doesn't allow.

What business deductions do you take for your writing business? Are there any that you're thinking of adjusting?

~~~

Danica Favorite works as an online moderator for a major publisher where she connects readers and writers with new fiction releases. Having spent time in the corporate world teaching tax law and preparing taxes, she much prefers fiction to numbers. You can connect with her at www.danicafavorite.com.

Which Tax Deductions Apply to You as a Writer?

It's tax season again and, if you're like me, the procedure boggles the mind. To help you struggle through the task of giving the IRS their due, I asked Danica Favorite the following questions about deductions:

"For a writer doing their own taxes (as opposed to having an accountant), what are some legitimate writing deductions we might miss? Are there deductions we might think are legitimate but aren't?" - Sandy

I'm so glad Sandy asked this question, because I think it's a great question. And I think my answers might surprise some people. There are a lot of legitimate deductions a writer can take for his or her writing business. But there are also a few deductions writers take that aren't deductible. I'm going to share a few of the most common.

The first thing I want to address is what you CAN deduct. The IRS standard for what is deductible for your business is what is REASONABLE and NECESSARY for your business. So what's reasonable and necessary? That's something the IRS does not define, but as a business owner deducting that expense, you should be prepared to explain how it's necessary for your business as well as a standard business practice among writers.

Here are a few suggested items you might be able to deduct:

·         Ink, paper, mailing supplies, and other office expenses.

·         Research materials

·         Conferences and other writing related education

·         Professional memberships

·         Advertising

·         Transportation Expenses

·         Meals and Entertainment

·         Business gifts

·         Legal and Professional Service

·         Other writing tools

·         Utilities

·         Computers and other equipment. NOTE! These should be depreciated and only in the proportion of business use. Care should be taken to determine the amount, if any, personal use can be attributed to these items

One thing I'd like to point out as a commonly missed deduction are your transporation expenses. When you take trips to the post office to mail things related to your writing business, or you're going to meet another writer for critique, be sure to track your mileage!

As far as deductions that people think are legitimate but aren't, I'm going to give the most commonly abused deduction by writers (at least in my experience). Business clothes. Unfortunately, the IRS has very specifically stated that the business clothes you're buying to wear to conferences are not deductible. A lot of writers try to claim it, but it's not legitimate. I know some writers have said, “but I claim business clothes every year.” But there's a problem with that logic. If the IRS chooses to audit those returns, that deduction will be disallowed, and the writer will be responsible for paying penalties and interest on the additional tax levied based on that mistaken deduction. Remember- just because you've deducted something, doesn't mean that it's a legitimate deduction. Even if you've gotten away with it in the past, the IRS has the right to take a look at previous years' returns and change them.

Another deduction mistake is taking a deduction for the entire cost of an item that is used for both personal and business expenses. For example, many writers want to deduct the cost of their Internet service. This is a legitimate business expense. However, if you have the Internet service in your home, and the rest of your family uses it, then part of it is personal use. So you need to apportion the amount of business use and only deduct that amount on your tax return.

As you can see, there are a number of great deductions you can take for your writing business. Just remember that they need to be reasonable and necessary for your writing business. Keep in mind that you need to only deduct the business portion of your expenses, and be cautious about deducting anything that the IRS doesn't allow.

What business deductions do you take for your writing business? Are there any that you're thinking of adjusting?

 

~~~

Danica Favorite works as an online moderator for a major publisher where she connects readers and writers with new fiction releases. Having spent time in the corporate world teaching tax law and preparing taxes, she much prefers fiction to numbers. You can connect with her at www.danicafavorite.com.