With tax time fast approaching, writers need to be aware that their writing expenses are tax deductible. BUT, the way you view your writing career has a big impact on how you deduct those expenses—or rather, on how those deductions affect your tax bill. For example, do you see your writing career as a hobby or as a business? Does it matter, and if so, why? And how can you convince the IRS to share your view of your writing career as a business?
Well, first of all, if you aren’t conducting your career as a business, you should be. Because it does matter. Although you can deduct the expenses from a hobby, you can ONLY deduct those expenses up to the amount of the income your hobby produces. In other words, if you have a loss (more in expenses than income) from your hobby, you cannot use that loss to reduce the amount of your income from other sources. Whereas with a business, you can deduct the amount of the loss from the income from your day job, and the income from your spouse’s day job, and the income from another business, and the income from your photography hobby (if you have one), and...well, you get the idea.
Okay, so you’ve decided your writing career is definitely a business, not a hobby. Good for you. Unfortunately, there’s a little more to it. There always is, isn’t there? Viewing your career as a business is a real good start, but it’s how the IRS sees it that determines the deductibility of your expenses. While you might declare it’s a business at the top of your lungs, if the IRS decides it’s just a hobby, you’re screwed. Is their word law? Come on, we’re talking about the IRS here.
Well, okay. Legally, no, their word isn’t law. You can get a lawyer and appeal their decision, but, trust me, you don’t really want to go there. At least not if you can help it. So the best course of action is to conduct your writing career in such a way that you have plenty of evidence to support your contention that it is, in fact, a business and not a hobby. The more evidence you have, the harder it will be for some hotshot IRS agent to contradict you. I’m sure you’ve heard the old saying, “If it looks like a duck, walks like a duck, and quacks like a duck, it might actually be a duck.” Maybe. Unless they can prove otherwise. Yes, that’s the way the IRS views businesses. But it really has to look, walk, and quack like a duck before they’re convinced. After all, they make more money if it’s not a business. So don’t give them any other options.
I once had an IRS agent as a research client. And like most underpaid government workers, he didn’t have a lot of discretionary income. Yes, I know, it’s rumored that they get a commission on the back taxes they collect, but I could never get him to admit that. At any rate, we traded. I researched the information he needed for his novel for free, and he told me how to save money on my taxes. And while I’m certainly not discounting the value of the research I did for him, considering the amount of money I’ve saved on my taxes in the ensuing years, I think I got the better deal.
In my class, Business on a Shoestring, I’ll pass along all his tips to you, along with others I learned during my years as a paralegal for business and tax attorneys in Oregon, Washington, and California. And I’ll not only teach you how to look, walk, and quack like a duck, I’ll teach you how to free up more time for your writing, which is something we all need. So come and join me.
Business on a Shoestring, presented by Dr. Pepper Norris, runs from April 4, 2011 through May 1, 2011
Award-winning author, Pepper O’Neal is a researcher, a writer, and an adrenalin junkie. She has a doctorate in education and spent several years in Mexico and the Caribbean working as researcher for an educational resource firm based out of Mexico City. During that time, she met and befriended many adventurers like herself, including former CIA officers and members of organized crime. Her fiction is heavily influenced by the stories they shared with her, as well her own experiences abroad.
O’Neal loves a good romance but that feels todays’ readers deserve more than just the same old love story. So O’Neal writes Romance on the Edge of Your Seat—romantic thrillers with pulse-pumping action, mind-numbing suspense, and heart-warming true love. She attributes both her love of adventure and her compulsion to write fiction to her Irish and Cherokee ancestors.
O’Neal also designs unique, economical book covers for publishers, as well as authors who want to self-publish their books. When she’s not at her computer, O’Neal spends her time talking long walks in the forests near her home or playing with her three cats. And of course, planning the next adventure.
She’s a witch, but no spell or potion can help her now…
White witch Kole Trillion’s life is perfect—almost. She has a successful business, customers who swear by her potions and spells, a black cat named Boo as a familiar, and a number of loyal friends. Unfortunately, she also has the bad luck to fall in love with a man who hates her. Unable to device a spell or potion to help her out of her distressing predicament, Kole’s determined not to let it ruin her life. And to keep her embarrassing heartache her own dark, little secret. But when Cupid gets involved, all bets are off.
He’s a cop who doesn’t believe in magic, or in love…
Police Detective Gage Corwin is convinced Kole’s nothing but a con artist out to cheat the public. Determined to put her out of business, Gage launches an investigation to prove she’s a fraud and a criminal. But the evidence just doesn’t add up. Not only can’t he find anyone she’s cheated, he can’t find a logical explanation for the things that are happening to his life—or his heart. But when he unwittingly mocks Cupid, the whole thing blows up in Gage’s face.