Writing income and taxes...

[elay2433]

I made a very miniscule amount of cash this year with short fiction - around $50. On the other hand, I spent a shitload of cash. Don't know the exact amount, but if I factor in shcooling/workshops, sample magazines, magazine subscriptions, market guides, a new printer, etc., it all adds up. Would it be worth reporting my writing income if only for the benifit of deductions, or, because it's such a small amount, should I just keep quiet. This is probably a question better suited for an accountant, but I figured some of you may have dealt with this all ready. Thanks for any help.

[Woody]

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[Ed]

I don't know what the rules are about self employment in the US, but over here in UK when you set up as a business your first year's accounts can include setting up costs, such as equipment, cost of training, etc. But to make it pay you have to earn at least that amount from the business to deduct it from the amount of taxable income you're going to pay tax on, so in this country it'd be a non-starter until you earned a decent amount of money. I think your tax system is different, though - you have personal taxation whether you're employed or self employed, so you may well find your writing expenses are deductable against another income stream.

Like you say, it'd be good to ask an accountant, or the IRS, though I get the impression the IRS over there is like the Customs and Excise here - ask them nothing, lest you wake the behemoth

[KatYares]

Report the 50 dollar income on Schedule C

Then, list all your deductions on Schedule C also.  It's okay to come up with a negative.

You can have a negative with the IRS for 3 years out of 5 and still claim your deductions.  If you can't show a profit after 3 years, the IRS will call your goal to be a writer a hobby and you will no longer be able to claim any deductions, but will still have to report your income.

I freelance for a living and I've been doing this for the last 9 years.

Go here....http://www.cch.com/Press/Reports/

Scroll to the bottom of the page and click on the link to request the Tax Guide for Journalists.  Everything in it applies to writers also.

Kat

[delph_ambi]

Yes, always report your income from all sources, however tiny. The law requires you to do so in the UK, and probably does elsewhere too. It won't make any difference to what you owe in taxes, but it keeps you the right side of the law.

[Geoff_N]

I'm registered as self-employed in the UK with the added benefit of paying only a token amount of National Insurance to guarantee my full pension when I qualify.

Like Ed said I could claim for computer etc for the first year - that year I earned a couple of thousand from wriing in royalties, direct sales at conventions etc and from a few comps. However, my expenses in promo, traveling, printing costs just balanced the income. Since then the royalties are steady but the income from editing other people's novels has risen.

Luckily my daughter is a chartered tax adviser so helps me if I have a problem.

[elay2433]

Thanks, everyone. And thanks for the link, Kat. I've requested the tax guide.