The money side of the writing biz scares the heck out of me. My multi-published, award-winning writer friend Rick Carey has remarked, “This writing thing is great. You can make, literarily, hundreds of dollars.” Another chum, who has the first book in a new series coming out in July, realized recently that she won’t see another penny out of the thing until 2014 … assuming she earns out her advance. Yet another writing friend was once accused of being genetically incapable of earning more than $18,000 a year.
It’s even shaky when you’re successful. Say you get a big advance (which you have to remember to put much of aside for taxes), that may be your last big chunk of change for the year. Or years!
But worse, for me, is the understanding that, should I ever quit the day job and pay my way solely through my writing, I’ll have to do all that tax stuff myself.
I made a little money from writing in 2012 — not much, but enough to make it worth moving from my Pay Pal account to a Starbucks card. According to the United States tax code, that makes me a working writer and Uncle Sugar wants to know how much I got. With tax time fast approaching, I figured I do a little research on what I can, cannot, and should do. (Note: I’m cool with paying taxes. Taxes pay for civilization, and I’m a big fan of that.) (Caveat: I’m no tax expert, not even all that bright, so don’t take my word for it. I’m not an expert. Go look for yourself. My info came from the World Wide Web.)
The IRS wants to know if you make as little as $1 off your writing. If you make less than $400 per year, you can report it on the front page of IRS Form 1040 as “Miscellaneous Income.” If you make more than $400 (lucky bastard), you have to get fancy and take on IRS Forms Schedule C and Schedule SE with Form 1040.
But, you may say, my friend Writer X got to deduct his trip to DragonCon last year. This is true, but, if you are going to try your luck with deductions, you definitely have to use Schedule C. The payment you received for writing is called your gross. Subtract your costs to get your net. Costs might include paper and note pads, computer supplies, and pens and pencils. You may also be able to deduct postage, subscriptions to writing magazines, membership in professional writing groups, and conferences. Should you want to get fancy, you can try to deduct your “home office” and all the power, heat, and Internet that go into it.
Keep your receipts and don’t get greedy by trying to deduct more than you earned. Home businesses that lose money over several years become “hobbies” in IRS eyes. To me, it seems a little like walking on thin ice with your future and your family’s solvency on your shoulders.
But I’m okay, because I spent it all on coffee.
Don’t trust me for financial advice. I’m not an expert. I’m not even sure where my checkbook is. You can get more info on the IRS Web site at http://www.irs.gov, or call the IRS Forms office at 1-(800)-829.3676.