As an author/business owner what deductions can I take on my taxes?
In the coming months, I’ll be going through my all my paperwork, ensuring I have listed all my income and all my expenses, ready to submit to my certified public accountant (CPA).
If you’re like me, you cringe at all this number-crunching stuff and whether you’re doing it right for the IRS.
An accountant friend, as well as my own CPA, advised I use the IRS Schedule C (Form 1040) to guide how I track my business revenue and expenses. It is the same advice I’m giving you, along with some added details.*
You can download a Schedule C and the corresponding instructions from this page at IRS.gov.
As far as the IRS is concerned, income is income.
But as an editor, book designer, and writer, I have multiple sources of income, and I like to know how much I make in each category. Thus on my income-expense document I track each one separately. At tax time, the total of all goes in one box on the Schedule C.
The same applies to the expense categories I track. I separate out several categories that eventually count as one at filing time.
Deductions for Authors
Here are some of the deductions most authors are going to account for:
- Advertising
- Office supplies
- Education (conferences you attend to improve your craft)
- Internet access (my business is internet-based and thus my business pays 100% of the cost)
- Online and offline software essential to your work (this includes software like Scrivener, website hosting, domains, email list servers and more)
- Home office deduction, which includes utilities (only if you have a dedicated space, even if that space is 5×5 feet in your bedroom)
- Publishing expenses (cost to purchase or print your books)
- Legal and professional services. For example, you hire a lawyer to review a publishing contract, or you hire a CPA to do your taxes.
- Equipment (your laptop, printer, desktop, etc.)
- Postage
- Travel, meals, entertainment (if you travel to conferences or speaking engagements)
- Dues to professional organizations related to your business
- Mileage or gas expended in traveling to conferences or speaking engagements can be deducted. It is accounted by mileage or actual gas purchased.
A good many of the above expenses are going to end up in the Part V: Other Expenses box on the Schedule C.
Depending on your needs, accounting software might be the way to go. QuickBooks is one of the more popular programs, but do your research to find what fits you.
The day is nearing when I’ll have to start using accounting software, but for now I use a document I created in Excel. For your convenience, I’ve created a template you can download.
The only people I know who actually enjoy this aspect of business are accountants. But I thank God for accountants! Tax laws are confusing, and I most certainly do not want to run afoul of the IRS.
Debra, thank you so much for reminding us this is the time to get our taxes together! The template is awesome. Thanks for making it easier on us!
Most don’t like to think about taxes, but I’ve found if I start early getting things ready, the process is a lot less stressful. I’m glad you like the template. My sister helped me with this several years ago, and I’ve been using it since. I tweak my categories when needed.