Hopefully, you already know that if you earn an income you must report it on your taxes. Whether you are a hobby writer or a working writer depends on whether you make a profit at the craft.
Rule of thumb is if your hobby shows a profit in at least three of the last five tax years, the law assumes you're trying to make money. If you don't, then it's assumed the activity is a hobby. Either assumption can be overcome with evidence to the contrary, meaning you might be able to claim you have a writing profession in lieu of a hobby if you can show the sweat infused in the business, and argue that most writers struggle to make a profit in that three to five years. It all depends upon your records. But either way, it's time to make those last minute purchases to write OFF that income as much as possible.
Yes, time is fleeting until 2011 rolls in, but you still have purchases you can make that will decrease your tax liability for 2010.
Supplies - Go grab a box of paper - one of those BIG boxes. Stock up on toner. Paperclips, bubble enveloped for your books, notebooks, your special ink pens. Don't forget the mileage involved running to the store.
Computer - Computers have become quite reasonable. You'll find Christmas sales everywhere. Remember yourself too as you scurry around shopping for others this holiday season. Can't afford it now? Finance it into 2011, but claim the full purchase price for 2010. Stick to no-interest financing like at Best-Buy when you you do.
Accessories. I'd kill for my laser printer. They are a huge savings in terms of speed and ink, and I'll buy another toner before January 1. Splurge for a larger monitor. Stock up on flash drives. Buy that great laser, wireless mouse. Try out a cam for YouTube presentations or a good microphone for audio podcasts.
Software - I'll write off Quicken
and MS Office 2010 
this year, but you might write off software like Dramatica Pro
, Power Writer
, or Contour
. Maybe Storybase
, New Novelist 
or Power Structure
. Website/Blog/Newsletter/Online Expenses - Get that website you've been putting off. Set up that e-commerce site. Set up a newsletter distribution. Online costs are valid expenses.
Furniture - Relieve your back and get that ergonomic chair. Quit stacking books on the floor and break down and buy a bookcase.
E-readers - Yep, you can take off that e-reader if you use it for work. I expensed my Kindle DX
last year. Kindle
s are cheap this year, and deals abound on iPads, Nook
s, SONY Readers 
and more.Subscriptions - Now's the time to renew your subscriptions to The Writer Magazine
, Writer's Digest,
Poets & Writers
, Writer's Journal
, et al. But did you know that if you freelance for magazines that you can claim all those other magazines, too? I subscribe toHobby Farm
, Backyard Poultry, and Southern Living 
as well as the writing mags, and claim all the cost on my taxes.Memberships - Do you belong to Mystery Writers of America, Romance Writers of America, Sisters in Crime, Science Fiction and Fantasy Writers of America, International Thriller Writers, Society of Childrens Book Writers & Illustrations or Author's Guild? Your professional writer affiliations are deductable. But then so are your other memberships if they impact your writing in any shape or form. I belong to MENSA and claim it each year as well as my South Carolina Writers Workshop dues. Doesn't matter if it's about chickens, accounting, teaching, hunting, or public speaking, if you use the organization in your writing research, subject matter or networking, claim it. Don't belong to a group you've had your eye on? Join up now. That way you 'll renew each year just in time that tax need. Don't forget the Chamber of Commerce, especially if you are a commercial or copy writer.
Conferences - If you intend to experience a conference in 2011, see if you can sign up now and deduct the conference fee.
Books - Get your latest Writers Market
, Guide to Literary Agents
, or Novel and Short Story Writer's Market 
and expense it off. Get a used one. Buy any book about writing, the subject you write about, any research material you need. Postage - Forever stamps are offered by the US Postal Service to preserve first class rate status even when postage goes up. Stock up on stamps now, as well as any postal supplies. Renew or obtain your post office or rental box while you're at it. I like having my postage coming someplace other than my residence. At a rental box, they can sign for your packages - a huge lifesaver for me.
Taxes and Business Licenses - In my county, I'm charged a business tax based upon the depreciated value of my assets used in the business. I make sure it's paid in December. Pay sales taxes you may owe. Frankly, I pay any taxes possible before the end of December. It's often claimable, whether you are a professional writer or not.
Insurance/Bonding - Pay liability insurance and bonding costs before the end of the year.
Utilities, Phone Bills, etc. - If you claim a room in your home, note all the little dangling, affiliates expenses with doing so. Be careful in staking this claim, however, since a room deduction impacts the later sale of the residence and carries some stringent requirements by IRS.
Mileage - You might run to the store to pick up a gift, but you see something you need for the business. Note your round trip mileage. The smart entrepreneur doubles up personal and business trips so those miles can reduce his tax liability later. When I travel to an event, I print off a page from GoogleMap, or similar direction finding site, and then note in the remarks section about who I met, what I did, the date and the purpose of the trip. I attend a local writer's group to critique a lot of my work. While I'm fast friends with them and enjoy a great meeting and dinner, I still claim the mileage - every two weeks like clockwork.
Don't wait until after January 1 to wonder what you could have done to improve your tax posture. Think now, while there's still time to stop Uncle Sam from taking so much of your hard-earned writing income.
8 comments:
This is the part of the writing biz that isn't fun, but oh so necessary! I've got "personal" and "professional" to do lists running right now, and the professional includes making purchases! I usually don't like buying stuff for myself this time of year, but Uncle Sam doesn't need any more moola than he's gonna get! :-)
this was an awesome article !!! I shared it on FB and TWitter
Funny I should read this today. I just bit the bullet and bought a laptop computer that I can use when I'm traveling. I wasn't thrilled about the extra expense, but my business has grown to the point where I can't afford to drop out of touch with clients for more than a day or two, and it is a nifty little end of the year write-off!
Great post - thanks!
Reading about the e-readers being deductible reminded me that I bought an Alphasmart this year for my writing and I can deduct that.
Do you know if tickets that I purchased for a writer's conference would be deductible this year, or would I have to wait until after I attend?
Excellent article! I used to write one like this for my colleagues in another business. I would like to add a couple things. I'm interviewing people for my book. Sometimes it entails travel, sometimes just lunch or a couple beers. But those are legitimate expenses. Keep meticulous records, and you'll have no problem expensing them. Also, I'm meeting with my insurance guys tomorrow to set up a SEP IRA (in anticipation of a fabulous 2011!). You can put more $ into it than a traditional IRA because you're self-employed. But very timely article as just today I made my list of business expenses for the end of the year!
Fantastic reminders! Thanks!
Alice
You claim the expense in the year you acquired it - i.e., when you wrote the check.
Hope
Great article--thanks! The thing about mileage is that the rules are pretty strict on it now and you have to have your car's mileage written down on the first of the year and do some other stuff, too. So the way you're tracking it is just right, but you also have to set it up right from the beginning of the year. Get yourself a little book now--a datebook or check register can work--and throw it in the car and write down your odometer reading on January 1st along with all the other stuff you said.
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