by Elizabeth S. Craig, @elizabethscraig
Clearly, I’m no accountant or tax lawyer. In fact, I encourage anyone with a large-ish writing business to use a CPA, as I do. I had one terrifying moment in 2013 where I realized that my tax return was a disaster. Fortunately, I found a well-recommended CPA to help me out before the tax deadline.
My accountant had me do two things right away: start pre-paying the state and federal estimated taxes, and set up a separate bank account for my book earnings and book-related expenses.
In 2013 I was still trying to wrap my head around the fact that this was so much of a business. I’d always tried to treat my writing as a business, but on the dollars and cents side I sometimes failed to handle it that way. Now writing income is direct-deposited into my account and whenever I need to buy printer ink (or a laptop), I make sure I take the money out of that writing account.
I’ve also gotten good about keeping track of possible write-offs. Here are the types of expenses that I track and give to my CPA:
Book production: Cover design, ISBN costs, Editing, Formatting, Library of Congress copyright listings
Advertising: Newsletter marketing (MailChimp costs), giveaway costs (Goodreads and others: the cost of participating in the program, the cost of the book, the cost of postage), photography (head shots)
Website: Website support and services, WordPress domain, hosting, domain name registration
Professional subscriptions and memberships: ALLi, Toastmasters, Hootsuite Pro
Courses and professional development: Any promo-related classes, writing-related resources, research material, etc.
Office Supplies: Ink, paper, chargers, batteries, USB microphones/cameras for podcasts, internet usage, software, postage
Conferences, festivals, book signings: Keep gas and food and hotel receipts. Note the cost of the conference.
Do you have a good way to keep track of your writing-related expenses? What have I missed on my to-be-tracked list?
Prepping for Tax Time as a Writer: Share on XPhoto credit: Got Credit on Visual Hunt / CC BY
Thanks for the checklist, Elizabeth. I’m printing this because I usually forget an item or two. Do you think that Internet service would also be deductible since writers have to use it for research, communication, etc.?
I know that I report my internet payments for the year to my CPA and that she works her magic on it somehow. :) I don’t think she uses the full amount as an expense since we have a whole family here using it…but she certainly deducts a percentage of it. Thanks for coming by!
What timing, Elizabeth! I just did my taxes yesterday! And, yes, all of those things are so important when you’re trying to make sense of your income (and outgo) as an author. Even if you get your computer repaired, that’s an expense worth including. All of those things add up!
You’re ahead of me! I’m trying to finish up gathering the documents. :) And you’re right…they really all do add up!
I dropped off our taxes last week. I have two forms I use to keep track of expenses on a monthly basis and one form for income. Keeping up with it monthly means I’m not overwhelmed at the end of the year.
I don’t know if I could bear to look at it monthly, but at least it’s fairly well-organized when I look at it in Feb, ha!
Staying organized really is a key to so much in this business!
Thanks for the checklist – I’m in the midst of creating a spreadsheet for this so this helps a lot! :)
Oh good! Glad to help….good luck with the taxes!
Mileage. Any miles you drive for business: to meetings, book signings, to shop for deductible items like ink and laptops. At over fifty cents per mile, it can add up!
It sure can! My CPA said to even track the mileage for driving to the bank and back when making check deposits (I still get some paper checks from the trad pub stuff). It definitely all adds up.
Hi Elizabeth – essential to be on track … I keep up to date as I need to … and there are percentage deductions that can be made – but each country and perhaps in the States … for different States too … is different – good to have a check list though – cheers Hilary
Taxes are incredibly complicated! A list definitely helps, but write-offs do vary per country.