- We are on a budget and saving money and not counting on our writing to take us from rags to riches.
- We are being wise about when we start functioning as a business (per the IRS.)
Now... *rub hands together* TAX DEDUCTIONS!!!!
Before I get too far into this, a disclaimer:
I am NOT a certified tax professional. So don't point to this post and say... "Krista said I could!" The IRS will roll their eyes at you. Really, no matter WHO gives you advice on tax matters, you should always double check it. This is for guidance and to steer you in the right direction, not schedule C filing instructions here:-)
So anyway, what expenses CAN you write off as qualified business expenses? To list them all would be just comical and you'd be yawning. But here are a few common ones, and some common ones to be leary of.
NO, you don't write off a portion of your car payment... or that brand used KIA you bought with your advance. You don't write off car maintenance or insurance either. You don't even write off your gas purchases (usually.)
What you write off is your mileage. The IRS has a standard mileage rate that you can use to calculate business use of a personal car for tax write off purposes. I won't quote one here, because it changes periodically, especially the last few years with the yo-yo gas prices. So track your mileage. To writer's groups, conferences, meetings with editors/agent, to the post office to mail your contract. Make sure you document where you went and the mileage. It's good to keep a mileage log! The IRS will want to see it if you ever get audited.
Exception is rental cars for while you are away. You just write-off actual expenses then including gas.
Most of us writers use our home as our office. So can we deduct our home expenses, aka mortgage/utilities?
Kinda yes, kinda no. I've heard a lot of opinions on this, so I won't give you another one. But if this is something you plan to do, I'd HIGHLY HIGHLY recommend a tax professional to assist you in your taxes vs "doing" it yourself. There are ramifications, especially if you own your home and later sell it, so you'll want to make sure you know exactly what you are doing before you do it.
You can write off a portion of computer expenses (if you use your laptop 50% personal and 50% business... you'd write off 50% of it...), and any home office items such as pens, pencils, paper, computer paper, ink, printer, etc that is used for your business.
There are the obvious other expenses as well. Contest fees. Editing fees. Conference fees and travel expenses (airfare, hotel, car rental.) Normal expenses for eating out while at conferences should be write-off-able as well.
The BIGGEST thing to remember is this:
SAVE YOUR RECEIPTS! and DOCUMENT DOCUMENT DOCUMENT!
Even if you don't think you'll be writing anything off this year... you could get to November and get that coveted contract... and you'll need those receipts!
And even if you aren't sure you can write it off... SAVE THE RECEIPT and ask your tax professional. The worst they can say is no.
Here is a good link (with subsequent good links) on what is deductible for small businesses. Some of this doesn't apply to us (i.e. cost of goods sold... unless maybe if you are self-pubbing or selling your own stuff) but it has some good info and links.
Discussion: Any questions on what you can deduct? Any expense you were curious about? And here is a fun question: Who does their taxes themselves... or hires someone to do them?? Will that change (or did that change) once you're published?