Tax Advice for Self Employed Writers
As a self-employed writer, you want to maximize your small business tax deductions for the royalty income you receive. Your understanding of allowable small business deductions and good record keeping enables your tax specialist to get you the best return. Royalties and expenses are reported on schedule E, Form 1040, Supplemental Income and Loss.
Keep your records organized. The receipts and notes you take during the year are the key to maximizing your small business tax deductions. Get in the habit of recording expenses related to the articles you write. Put receipts in a file or pocket folder and jot a note for each item on a list. Write down everything even if you are not sure it can be deducted, your tax specialist will know what to claim.
Track your office expenses. Internet service, printer supplies, pens, paperclips, and all business supplies are tax deductible. Save receipts for writing guidebooks, magazines, and subscriptions related to your work. The room, kitchen, or bedroom where you write is your office, allowing deductions to upgrading the décor, new bookshelves, blinds to block sunlight, a ceiling fan, a rug, or a new chair. As long as improvements directly relate to your workspace, they qualify as a small business tax deduction.
Depreciate large expenses. The IRS encourages depreciating property having a useful life substantially beyond the tax year, such as a new computer, laptop, printer, or desk. Bring your receipts when you visit your tax specialist.
Deduct your cell phone charges or new phone if you make any calls related to your work. Write it on your list if you set up an appointment or do a phone interview for your article.
Track your travel miles. Mileage accrued while researching articles is a small business tax deduction. If you write about choosing and caring for a new pet, your travel to purchase the animal and subsequent vet trips is deductible, as is your trip to the store if you write about food and supplies.
Think creatively about your research expenses. Activities and supplies purchased during the research phase of writing are permitted as a small business tax deduction as long as you keep good records. The article examples above allow you to deduct re-homing and license fees. Interview and write about choosing a vet and deduct the cost of that visit. Write about gardening and deduct any pots, plants, and soil you purchased and referenced while writing your article. Write about running shoes and deduct a new pair. Maximize your refund by fully understanding allowable expenses related to your royalty income.
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