As a writer, you may spend countless hours coming up with a story, creating a scene, and setting it to words. Wouldn’t It be great if you could deduct all the time spent creating your great work of fiction or nonfiction as a tax write off?
Absolutely. Is it deductible? Of course not.
The law does not allow you to deduct the value of your time. Apparently, this falls under the guise of intangibility in that no one person would be able to agree on the value of one person’s time versus that of another.
However, we will waste no more time musing about what could be. What can I as an author deduct on my return?
There are two categories of expenses, those that are immediate, whose useful life is one year or less, and long term, which is an item whose useful like is over a year. Here are examples of deductible expenses that fall into category one:
- Office supplies, such as ink pens, envelopes, Post it notes, pail, broom, paper, etc. Virtually any item that is known to be associated with an office is deductible.
- Printer ink
Here are examples of category two deductible expenses:
- Home office
- File cabinet
You can get an immediate deduction for category one expenses by simply deducting the cost of the item. Category two expenses are usually depreciated over the useful life of the item, unless you qualify to expense the cost in the first year. However, listed property, such as automobiles and the home office in the home that you own will never be fully deductible in the first year of service.
In general, expenses that you incur that you can substantiate to be ordinary and necessary to your business will qualify to be deducted. For example:
- Expenses incurred to market your book, such as advertising, mailers, and the like.
- Expenses incurred in promoting your book. These may include overnight travel, car rental, meals, and hotel stays.
- Membership fees paid in connection with your business. For example, If you belong to the Association of Fiction Writers, you can deduct the expense.
- Legal fees you pay in connection to your business activity are deductible.
- Fees that you pay to others for the performance of services related to your business.
- Fees incurred for business banking accounts.
- Tax preparation fees
- Fees that you pay to others to obtain income, such as the costs of collection on a bad debt.
When using your automobile, keep a log of your total mileage, differentiating between personal and business. In addition, keep a record of your actual auto expenses, such as oil changes, car washes, repairs, insurance, registration costs, parking fees, and tolls. If you need to rent a car for business purposes, keep all records of the transaction.
Keep in mind that that this list is not all inclusive, please consult with your tax expert regarding your personal situation.
Remember that for any expense that you claim, you must have receipts to substantiate your deduction. Failure to maintain proper records can result in the disallowance of deductions and expenses, resulting in a balance due to the IRS, along with penalties and interest.
Guest post by Cora Parks. Cora Parks is a lifelong Atlantan whose vision is to bring proactive tax counsel and personal responsibility to the masses in the area of taxation. She has published seven books on taxation topics, including How To Pay The IRS When You're Broke, Your IRS Refund, and Reduce Your IRS Tax Penalties.