(NOTE: I am not giving legal or financial advice below but relating my experiences.)
Maybe my experience with filing my income taxes will help someone else. Most specifically I found that my sister's advice helped considerably. She's a successful business woman and told me I had missed the boat last year in not exploring the tax writeoffs and deductions available to free-lance writers.
My problems began last year. Mid-2018 I published a book which ignored several rules/suggestions I thought universal. I thought it would sink without a trace, but I loved writing it so much and it came to me so easily that I didn't care. To my surprise it took off like a (model) rocket, making so much money I could buy a new car to replace my decrepit 2000 Toyota with a Lexus. (A luxury version of the Toyota sedan I loved.) Then came tax time & I found that I owed $3000+ dollars fed tax and $400+ state tax. Ouch! But I paid it.
Last year I put out a sequel to the first book. Again the rocket. Plus the second book's sales had stimulated a new lease on life on the first book. And on my previous six books. Then came tax time this spring. I owed $10,000+ and $2000+. Ouch! Ouch!
Time to take my sister's advice. I switched tax prep software to the cheapest of several HRBlock versions but with more options. No glory. Same results. I tried a TurboTax version with even more options. Hurray! More deductions meant I owed $7000+ and $1200+.
I switched to tax prep software FreeTaxUSA to double-check the results of TurboTax. And in the process of filling it out I found that I had missed some deductions. And that I'd reported the royalties with the wrong form. I should have used Section C not Section E. The latter also has a royalties line but that referred (IRS documents said) to a different kind of royalties than literary. In the end I wound up having to pay $3600 fed tax and got a $60 state refund.
I take away from these experiences two lessons. One, I should have listened to my sister, the business person that I AM NOT. Two, that maybe I should have gone to a tax pro in the first place. Just because I can help figure out how to launch a satellite into orbit doesn't mean I can figure out how to launch a complicated tax return successfully.
Well, I did. But it took me several FULL days of calculation and research and recalculation and more research. I could have (as I have in the past) written several chapters of a book. I've gotten pretty expert at writing. Maybe I should have spent my time at that instead of DIY effort at something I was NOT expert at.
Next year I still will do my own taxes. But this year already I've published the last book of my well-performing trilogy. It seems as if (though it is still VERY early) it will do even better than the previous two books. I've also got three more books that (Corona viruses permitting) I'll publish, one next week. Maybe next year I will let a pro do my taxes after I've tried my hand at doing so.
(NOTE: The problems I had with HRBlock and TurboTax were my fault, not that of the software. If I had used them properly I believe that I would have gotten the same results as with FreeTaxUSA.)
Maybe my experience with filing my income taxes will help someone else. Most specifically I found that my sister's advice helped considerably. She's a successful business woman and told me I had missed the boat last year in not exploring the tax writeoffs and deductions available to free-lance writers.
My problems began last year. Mid-2018 I published a book which ignored several rules/suggestions I thought universal. I thought it would sink without a trace, but I loved writing it so much and it came to me so easily that I didn't care. To my surprise it took off like a (model) rocket, making so much money I could buy a new car to replace my decrepit 2000 Toyota with a Lexus. (A luxury version of the Toyota sedan I loved.) Then came tax time & I found that I owed $3000+ dollars fed tax and $400+ state tax. Ouch! But I paid it.
Last year I put out a sequel to the first book. Again the rocket. Plus the second book's sales had stimulated a new lease on life on the first book. And on my previous six books. Then came tax time this spring. I owed $10,000+ and $2000+. Ouch! Ouch!
Time to take my sister's advice. I switched tax prep software to the cheapest of several HRBlock versions but with more options. No glory. Same results. I tried a TurboTax version with even more options. Hurray! More deductions meant I owed $7000+ and $1200+.
I switched to tax prep software FreeTaxUSA to double-check the results of TurboTax. And in the process of filling it out I found that I had missed some deductions. And that I'd reported the royalties with the wrong form. I should have used Section C not Section E. The latter also has a royalties line but that referred (IRS documents said) to a different kind of royalties than literary. In the end I wound up having to pay $3600 fed tax and got a $60 state refund.
I take away from these experiences two lessons. One, I should have listened to my sister, the business person that I AM NOT. Two, that maybe I should have gone to a tax pro in the first place. Just because I can help figure out how to launch a satellite into orbit doesn't mean I can figure out how to launch a complicated tax return successfully.
Well, I did. But it took me several FULL days of calculation and research and recalculation and more research. I could have (as I have in the past) written several chapters of a book. I've gotten pretty expert at writing. Maybe I should have spent my time at that instead of DIY effort at something I was NOT expert at.
Next year I still will do my own taxes. But this year already I've published the last book of my well-performing trilogy. It seems as if (though it is still VERY early) it will do even better than the previous two books. I've also got three more books that (Corona viruses permitting) I'll publish, one next week. Maybe next year I will let a pro do my taxes after I've tried my hand at doing so.
(NOTE: The problems I had with HRBlock and TurboTax were my fault, not that of the software. If I had used them properly I believe that I would have gotten the same results as with FreeTaxUSA.)