by Lori Hatcher
Occasionally someone will ask me, “Why did you become a writer?”
If I’m in a serious mood, I’ll tell them how I feel called to share the hope we have in Christ or that I love to share the gospel through devotions.
My hate affair with math goes way back. It probably began with the first word problem and escalated in my high school and college years. The scariest book I’ve ever read? My algebra textbook.
Can I get a witness?
But sometimes we writers must set aside our preferences (and our phobias), grab our calculator, and do some math. Tax season is one of these times.
If you’re a professional writer, sometime between now and April 15, you’ll grab that stack of receipts, sticky notes, and bank statements and cobble together an accurate (I hope) rendition of your profits and losses.
I’m not an accountant (that profession involves numbers—lots of numbers), but I have learned a few things about how to accurately report income and pay taxes associated with my writing life.
Four Records Writers Should Keep for Tax Purposes
1. Book Inventory
If you sell books at speaking engagements, to friends, or at writers conferences or book fairs, you may be required to report your inventory each year as part of your taxes. Keeping track of your books can be as simple as taping a piece of paper on your box of books and writing down each sale as it happens. List the date, how many books you sold, and how much you charged. When the box is empty, file the sheet, order more books, and start over.
2. Book Sales
The IRS requires writers to report income we’ve earned from our book sales. Before I pursued writing professionally, I listed this amount as Miscellaneous income on my tax return. Reporting will get more complicated as your writing business matures, but if you’ve used an inventory sheet like the one I described above, you’ll know exactly how much you’ve earned from book sales.
3. Sales Tax
If you sell books in person or through your website, your state may require you to have a retail license and collect and pay state sales tax. This is true in South Carolina, where I live. Don’t assume because you don’t sell many books that you aren’t required to pay sales tax. Some authors have incurred huge fines for failing to pay sales tax on the books they’ve sold. Call your local department of revenue if you’re not sure.
4. Mileage
If you’re filing taxes on your writing business, mileage could be one of your largest deductions, so keep careful records. I keep a pocket calendar in my glove compartment. Every time I drive to a writing-related event (conference, speaking events, Word Weavers meetings), I note the starting mileage on my odometer, ending mileage, miles traveled, and the venue. At tax time, I add up all the mileage, and voila! I have a helpful tax deduction. If you prefer an electronic ledger, Google “Mileage tracker” and check out some of the apps available for your smart phone.
In Conclusion
Jesus encouraged His disciples to render to Caesar (the government) what was Caesar’s, and render to God what was God’s. Having a good understanding of our local tax laws (and, in some cases, obtaining the services of a tax professional familiar with small businesses) helps us conduct ourselves honestly and remain above reproach. Having a system in place to handle the business side of our writing lives helps make this possible.
While these tips might not help you with this year’s taxes, if you implement them now, perhaps next year be a brighter, less math-terrifying year.
Additional Resources
I’ve learned so much from Thomas Umstattd’s podcast, Novel Marketing and his course, The Tax and Business Guide for Authors. Also check out his excellent article, “How to Sell Your Book in Person.”
TWEETABLE
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Thank you, Lori, for your post which reminds me I need more information about taxes and the business side of writing articles.
ReplyDeleteYes! This is such an important area to stay well-educated and up to date.
DeleteLori, I don’t know much about business OR about signing in for commenting. 🥴 I don’t mean to be anonymous! This is Jo Grey
ReplyDeleteIt’s an important area to brush up on, for sure, Jo. Thankfully, we can find lots of good information if we search for it :)
DeleteThanks for this helpful information, Lori. Writers also need to report income from royalties and speaking engagements. Any income we receive through writing and speaking needs to be included. Regarding book sales---after you report the income from book sales, you can add the cost of your books to your deductions. The costs of purchased books cannot be deducted until you sell the books.
ReplyDeleteYes! If I’d had a longer word count, I would have included these important points. Thanks for chiming in.
DeleteThis is great, Lori. I use an app called Stride to keep track of my mileage. I wanted to share in case anyone else wants to check it out.
ReplyDeleteAwesome! Isn’t technology wonderful?
DeleteI love math, but I hate taxes, Lori, so this is great information for me. I hadn't considered deducting mileage before. Thanks for the info.
ReplyDeleteTaxes come with a unique stress, for sure. So glad to pass along the tip about mileage. It’s amazing how quickly it adds up to a helpful deduction.
ReplyDelete