tax time

(insert snarky comment about AW being an international board, and tax codes differing greatly in various parts of the world, here)

What can:
*Books you buy that are in the same genre as you write (research)
*If you buy an electronic book reader and books for said reader the same type you write (also market research)
*A certain percentage of online access (like your DSL monthy charge)
*Paper, ink, pens, and office supplies
*Tolls and gas if you take a business trip to something like a con or writer's conference
*Part of the expense of a new laptop, if you use it for business (AW counts as networking). Not sure about if you use it for something else, like school, that counts, but I think you can deduct a percentage then. Turbo Tax tells me.
*Membership fees in professional organizations, like SCBWI or SFWA or Author's Guild
*Subscriptions to magazines that pertain to writing
*Any fees associated with your author's website, like annual hosting fees or domain name charges.

These are just off the top of my head and things some people forget. Of course since I've had declarable income the last couple of years, where I get forms and everything, I've had to itemize all this stuff.

I wouldn't deduct for home office space, because it gets tricky if you use it for more than writing, plus then it becomes a hassel when you sell your home.

*NO, you cannot deduct the lattes that you buy while writing in B&N. You CAN deduct a business lunch if you take your editor or agent out, but usually that's the other way around.

I WAS going to say "Home office," especially since I deduct that every year.

Office supplies. Computer (one time). Printer (one time). Although, these depreciate.

Chair. (Yes, I deducted my chair one year.)

Internet and phone.

Mileage on your car for driving to book signings or anywhere else book-related.

And, this may be stretching it, but say you're flying to some other city. While you're there, you stop in a bookstore to see if they carry your books. If they don't, you talk to the manager to see if they will. Business deduction on the plane ticket.

I don't like to get too greedy with this stuff, but I do or have deducted:

- my computer (although it's supposed to be used for writing exclusively iirc.)
- printer paper
- writing-related plane tickets (when I can prove it's business only.)
- writing-related postage
- printer ink
- writing-related books

I never bothered with the home office(too much of a PITA for me at the time,) or things like internet and phone.

You can deduct anything and everything, as long as you don't get audited.

^ And you shouldn't get audited, provided there aren't any major discripencies huge red flags.

maestrowork said:

Yeah, but if you get audited... LOL A friend of mine did, and he had to show all his receipts, which he didn't keep, so he ended up owing IRS.

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Oops! Always keep your receipts for 7 years.

(Unless you're me and you keep them for a whole lot longer than that.)

An audit in the UK is called a tax inspection, and if you get one of those it’s time to change your name and emigrate.

In fairness, you never know what can trigger an audit. I was once audited because I wrote some things for the Hearst Corporation, and some dummy there removed a digit from the middle three numbers of my phone number, and then used my phone number as my social security number when they paid their taxes.

This, of course, made the IRS think I was trying to pull a fast one, and a big, fat audit came my way.

I have no idea how anyone could possibly make such a stupid mistake, but it happened.

Don't forget:

postage for submissions
conference registration fees
writers' group dues
mileage to/from writers' group meetings and classes, etc.
PR stuff (give-aways and press releases, etc.)

Be careful with the home office deduction unless you have a room that's dedicated to writing; also beware of the need to recapture that depreciation when you sell the house, so it may not be worth taking if you plan to sell it in the near future.

Be careful with deducting things that have a mixed use, like the computer. The IRS could ask for a log that shows the hours you spend on the computer for writing versus hours spent doing other stuff (to validate the percentage of business use).

Also be careful of taking travel expenses for a mixed-purpose trip. If you're going somewhere for a non-writing reason, and you stop off to do a writing-related thing, that does NOT make the entire trip deductible. It only makes the detour part (mileage, perhaps, not the plane tickets) deductible. Sort of like when you go somewhere for work, and the hotel charges the same, whether there's one person in the room or two, so you can deduct the entire hotel expense, even if you bring a spouse with you, but the spouse's plane ticket is NOT deductible.

Also, I believe some audits are purely random. You don't have to have done anything wrong. The IRS computer just spits out the occasional random return for review, and then the human being who looks at it will check it for red flags, including the home office deduction (maybe; it used to be a red flag, but they claim it's not now) and small businesses that have large losses year after year. Writers are perhaps fortunate in that, while it may take many years to show a profit, the start-up expenses in this career are relatively small, so the losses are relatively small.

JD, not giving individual legal advice, just general information

The IRS does do so many random audits each year, along with any red flag audits. They will tell you whether yours is a random or a red flag, which helps you get ready.

I think my favorite deductions are magazine subscriptions and books.

maestrowork said:

One thing I learned was the claiming Home Office deductions is a red flag for the IRS, and thus it's better not to do that. And if you do, make sure you KEEP very, very DETAILED records.

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They sure can, and if you get audited, and if you claimed your computer, they'll check it to see just how you used it.

And that home office deduction can come back and bite you, if you have to sell your house.

If I were you, especially since allowable deductions change every year, I would talk to a tax guy. You don't necessarily have to have them prepare your taxes, but they would be able to tell you how to maximize your deductions and which things are allowable. I know that this helped me when I filed. My aunt is an accountant and I had all kinds of questions for her.

From my experience, the best tax consultant is the IRS. They're always up to date on their own rules and regulations, have always been more than willing to spend long periods of time on the phone with me, and answer every question I have.

If the IRS then questions anything, it's nice to be able to say, "Hey, you're the ones who told me to do this."

I also record all business calls.

I seem to say this every single year, but if you're a writer, and if that is your career, then take the home office deduction. You can, in fact, deduct anything one might find in an executive office if you take the home office deduction. I have a very large-screen TV and audio system in here, which I deducted. I have custom-built cabinetry and this desk, which I deducted (or depreciate, I can never get that straight and leave it to my accountant). My computer is here at my desk; I also have a laptop. Two very good printers, one of which is also my dedicated fax. Anybody walking into this house would believe I use this room for work, despite the comforts and conveniences I have here.

Now. I have made my living as a writer -- and only a writer -- for more than 25 years. I have never been audited. *knocks wood* I know a LOT of other writers, and few of them have been audited. For those who have, the home office deduction was never an issue.

Because, after all -- where else would a self-employed writer write except in his or her home (assuming you don't keep a separate office elsewhere)?

Sure, you have to follow certain rules if you later sell your house. But in taking the home office deduction, you can also take a percentage of your HVAC costs, based on square footage. And a percentage of various taxes. Possibly a percentage of your mortgage. And so on. A good accountant can advise you; an accountant who understands how writers work and get paid is a huge bonus.

The home office thing aside, as a writer you can also deduct all books you buy -- not just research books; reading widely helps in your career because it's market awareness. You can deduct DVDs and satellite costs, both for research and, again, market awareness. You can deduct all magazines and newspapers. I keep a separate office phone line, so that's fully deductible.

Hell, the lamps in here, replacement lightbulbs, a percentage of my cleaning (as in Merry Maids) costs, even artwork -- all are legitimate expenses to be deducted or depreciated. The window treatments in here. The rugs.

Here's the thing. We don't deal in a cash business. (At least not if we're published rather than printed, and not responsible for hand-selling our own books.) Every dime we earn gets reported. So as long as you keep receipts, and good records, you're really not all that likely to be audited unless it's one of the random ones.

I don't happen to believe I should avoid legitimate deductions out of the fear that I may one day have to argue this or that deduction with an IRS agent. Even my previous accountant, a very, very conservative man, encouraged me to deduct everything I could argue as being necessary for the advancement of my career.

We have "companies" that don't, generally, have a high overhead. We keep our desks and chairs for decades, most of us, because they're broken-in and comfortable. We change our computers when necessary, and for most of us that means wearing out the old one. (I'm missing so many letters on the keys of this computer's keyboard that anyone who didn't touch-type would be lost trying to use it.)

Our deductions tend to be small in the scheme of things. Again, that's assuming a successful career as a writer; writers not showing a profit to the IRS are a different matter entirely.

Anyway, my view has always been that you keep all your receipts and deduct everything you can. Which I do.

I am not an accountant and I've never played one on TV. I'd advise anybody to have a good accountant and to listen to him/her (after educating him/her on the publishing business).

If writing is a part-time gig, and you do indeed have an office (and job) elsewhere, then anything you deduct at home is far more likely to raise a red flag.

As with most things, seek the advice of a professional.

And now, I'm going to wander away after giving my yearly A Home Office Deduction is Not a Guaranteed Audit speech.

CheshireCat said:

I seem to say this every single year, but if you're a writer, and if that is your career, then take the home office deduction. You can, in fact, deduct anything one might find in an executive office if you take the home office deduction. I have a very large-screen TV and audio system in here, which I deducted. I have custom-built cabinetry and this desk, which I deducted (or depreciate, I can never get that straight and leave it to my accountant). My computer is here at my desk; I also have a laptop. Two very good printers, one of which is also my dedicated fax. Anybody walking into this house would believe I use this room for work, despite the comforts and conveniences I have here.

Now. I have made my living as a writer -- and only a writer -- for more than 25 years. I have never been audited. *knocks wood* I know a LOT of other writers, and few of them have been audited. For those who have, the home office deduction was never an issue.

Because, after all -- where else would a self-employed writer write except in his or her home (assuming you don't keep a separate office elsewhere)?

Sure, you have to follow certain rules if you later sell your house. But in taking the home office deduction, you can also take a percentage of your HVAC costs, based on square footage. And a percentage of various taxes. Possibly a percentage of your mortgage. And so on. A good accountant can advise you; an accountant who understands how writers work and get paid is a huge bonus.

The home office thing aside, as a writer you can also deduct all books you buy -- not just research books; reading widely helps in your career because it's market awareness. You can deduct DVDs and satellite costs, both for research and, again, market awareness. You can deduct all magazines and newspapers. I keep a separate office phone line, so that's fully deductible.

Hell, the lamps in here, replacement lightbulbs, a percentage of my cleaning (as in Merry Maids) costs, even artwork -- all are legitimate expenses to be deducted or depreciated. The window treatments in here. The rugs.

Here's the thing. We don't deal in a cash business. (At least not if we're published rather than printed, and not responsible for hand-selling our own books.) Every dime we earn gets reported. So as long as you keep receipts, and good records, you're really not all that likely to be audited unless it's one of the random ones.

I don't happen to believe I should avoid legitimate deductions out of the fear that I may one day have to argue this or that deduction with an IRS agent. Even my previous accountant, a very, very conservative man, encouraged me to deduct everything I could argue as being necessary for the advancement of my career.

We have "companies" that don't, generally, have a high overhead. We keep our desks and chairs for decades, most of us, because they're broken-in and comfortable. We change our computers when necessary, and for most of us that means wearing out the old one. (I'm missing so many letters on the keys of this computer's keyboard that anyone who didn't touch-type would be lost trying to use it.)

Our deductions tend to be small in the scheme of things. Again, that's assuming a successful career as a writer; writers not showing a profit to the IRS are a different matter entirely.

Anyway, my view has always been that you keep all your receipts and deduct everything you can. Which I do.

I am not an accountant and I've never played one on TV. I'd advise anybody to have a good accountant and to listen to him/her (after educating him/her on the publishing business).

If writing is a part-time gig, and you do indeed have an office (and job) elsewhere, then anything you deduct at home is far more likely to raise a red flag.

As with most things, seek the advice of a professional.

And now, I'm going to wander away after giving my yearly A Home Office Deduction is Not a Guaranteed Audit speech.

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If you do get audtited, and just because you haven't yet does not mean you won't, you'll regret some of those deductions.

Red flags aren't the only audits. Most audits are random, picked by the computer, and you're gambling your number won't come up. It probably won't, but if it does, you're going to be amazed at how thorough the IRS is, and how huge the fines can be.

Well, since I had two former IRS agents advise me on this stuff, I think I'll take my chances.

As always, YMMV.

maestrowork said:

One thing I learned was the claiming Home Office deductions is a red flag for the IRS, and thus it's better not to do that. And if you do, make sure you KEEP very, very DETAILED records.

Click to expand...

That sounds really odd to me. In Canada it's pretty common to claim home office space. I do it for my husband's business and I do it for my writing space as well. I also claim a percentage of heat and light, interest on my mortgage and property taxes according to the square footage I use for business purposes.

ishtar'sgate said:

That sounds really odd to me. In Canada it's pretty common to claim home office space. I do it for my husband's business and I do it for my writing space as well. I also claim a percentage of heat and light, interest on my mortgage and property taxes according to the square footage I use for business purposes.

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See post #2.

And yeah, the home office expense is fine in Canada. AND we don't have to apply the benefit against our profits if/when we sell.

CheshireCat said:

Well, since I had two former IRS agents advise me on this stuff, I think I'll take my chances.

As always, YMMV.

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You go right ahead, but athe current IRS agent who helps me disallows several of the deductions you claim.

Jamesaritchie said:

You go right ahead, but athe current IRS agent who helps me disallows several of the deductions you claim.

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I'd be curious to know which ones, and what rationale he uses.

Not that I plan to change anything, mind you.