Tax Time

It's that lovely time of year again, when writers get hives and start biting their nails. Yep, it is a deadline, but no, it doesn't involve your prose. It's tax time.

I used to get anxiety about it, too, but it really isn't that hard, with a little organization and some math skills (and a good tax guy to make sure you have all your math right).

Some Basic Organization Tips

At the beginning of each year, I start a file with the year labeled on it. Inside the file, I have dividers marked House, Writing, Medical, Donations, etc. I put all the year's applicable receipts in it, sorted by where it falls. All writing receipts, including those for book purchases (my own and others'), office equipment and supplies, income, 1099s from my publisher, writing-related postage, and domain fees, go in my Writing section. If you keep a folder in your emails pertaining to these incomes and expenses, it helps you sort and print applicable receipts at year's end. This includes mileage driven for the purposes of your writing, such as trips to your writers' conferences and meetings. (The IRS publishes the current mileage rate every year. You can Google it to get right to the page.)

If you itemize, you may also be able to write off a portion of your mortgage, homeowner's insurance, and utility bills. Be sure to save year-end totals for these expenses so that you can calculate your home office's portion of these bills.

Be sure your deductions are sensible, logical, and related to your writing, with receipts showing proof of expense. Your pleasant vacation to Hawaii, while it may become good book fodder, is probably not a business expense. Your trip to the national RWA writer's conference, however, is a verifiable business expense, because you're going there specifically to learn about your craft.

Keep a spreadsheet where you can enter the data from your receipts, and you will be able to track your income and losses each year. If you like the quick answers, like me, you will be able to see at a glance whether your year's effort is paying off, and make adjustments the following year accordingly.

Disclaimer

I am not a tax professional, merely an author who has been doing this for a while. Don't take my words as gospel on the subject, just a rough guide. Seek a professional's advice for what is allowed in your state when it comes to navigating the tax season. Good luck!