Taxes and Writers

Do I need to file taxes as a writer?

The simple answer is it depends. Here are a few considerations in deciding whether or not to put your writing on your tax return.

Did you receive any income?

Many people think you need a certain amount of income to have to file, however, this is not necessarily true. The IRS taxes people based on their TOTAL worldwide income, so even that $25 check you received for the devotional you got published is subject to tax laws. If you’re already filing a tax return because you have a job or other reason to file, the $25 check needs to be included. If you don’t file a tax return because you don’t make enough money in general to file, then you need to see if this income will bring you over the amount of money needed to file. If not, you won’t need to file.

Did you have any expenses?

Membership dues for organizations like ACFW, conferences, professional magazines, postage for submissions, and many other items can add up significantly over the course of a year. If you have expenses for your writing business, seriously consider filing your tax return to include those expenses to minimize your tax liability. For example, if you sold some articles to a magazine and received $1000 in total income for the year, and you do not deduct your expenses, then the IRS will make you pay tax on the full amount. If you had $900 in expenses and deduct those expenses on your tax return, you’ll only pay tax on $100. Which would you rather pay?

What about expenses and no income?

If you did not receive any income as a writer, you may still benefit from filing taxes as a writer if you had expenses. If you are working towards publication as a professional and not merely a hobby, it is possible to deduct your writing expenses to generate tax savings by filing it as a business. The basic IRS rule is that if you don’t generate a profit in 3 out of 5 years, your business may be declared a hobby and your losses disallowed. However, the IRS provides a series of guidelines* to help determine whether or not you have a hobby or a business. Based on those guidelines, if you can prove that you have a business, you can deduct away! The benefit to this is that as a writing professional, you’re getting credit on your taxes for all the hard work you’ve put into your writing even if you may not have gotten the big payoff yet.

*More information on the hobby loss considerations can be found at this link on the IRS website