Tax season is upon us, and it’s time to get organized to file. While you don’t need to be an expert in the financial arts (consider hiring a good accountant for that), you should know the two basic types of information you’ll need to gather together before you can file.
1. Your tax-deductible expenses
As a self-publishing author, there are a number of expenses that you can deduct. If you hired a book editor, for example, you can deduct that expense. Designers, marketing freelancers, and more are all people whose payments can help ease your tax burden.
Keep in mind, though, that if you’ve paid a freelancer more than $600, you’ll be responsible for sending them (and the IRS) a 1099-MISC form.
Writers can be liberal with their “creative deductions” so long as you can show the IRS that you’re making a serious business effort to make your writerly pursuits profitable. So, compile your office and research expenses that relate to your writing. Books, a laptop, notebooks, music, movies, and more can all be counted among your deductions so long as they relate in some way to your writing.
If you have trouble staying organized with your receipts, take a look at scanning apps and make sure you’re digitizing your receipts as your spend your money. TinyScan is good for quick and easy digitizing, but Shoeboxed has some advanced features that are great for people with lots of expenses (and mileage) to track.
2. Your taxable income
Just as you keep track of your outgoing expenses to report on your taxes, you need to keep track of all of your incoming funds. If you’re selling books via Amazon’s Kindle Direct, take the time to review their tax information. If you’re selling your book direct from your author website using PayPal or another payment portal, collect all of that data.
It’s easy, if you’ve only sold a few copies of your book via one avenue, to forget to report that income. However, in order to avoid hassle later on, it’s essential to maintain good records and report even small amounts of your income.
These may seem like basic tips, but sometimes a simple refresher is exactly what you need as you start the potentially daunting task of organizing everything for your annual tax appointment! Good luck!