The Silver Lining | Friday Five tax write-off areas for (paid) writers

As a graphic freelancer, compiling my yearly taxes is loads of fun. I go through every receipt from the entire year (and oh yes, I save them all) and input them into separate excel spreadsheets so my accountant has an easier time figuring out what’s deductable or not. Therefore, I thought I’d pass along some of the info I’ve learned over the years for writers who got paid in 2008. Note, if you did not get paid for your writing, then your writing is only considered a hobby, not a career, and unfortunately you cannot write-off anything related to it. Also, I recommend you get an accountant to look over your receipts. Freelancers are more prone to audits, and you want to make sure all your write-offs are legal and that you have the documents to back them up. These are not tips to swindle the government, these are legit ways you can try to get a better tax return this year by writing-off items you might not have realized are possible.

1. OFFICE
I’m assuming most of you do your writing out of your house/apartment. If you do, then you might be able write-off a percentage of your rent/mortgage. I don’t know the percentage for this. I just tell my accountant how many hours I work from home, then he factors in things like my boyfriend who lives with me, how many rooms I have in the apartment, etc. I think for me it works out that I can deduct 1/3 of my half of the rent because I often use the apartment as office space. I’m in a one-bedroom. Along the same lines, you can write off a portion of your internet bill, your telephone bill, cell phone bill, and possibly even your television bill if you watch TV for research. (This might be more apropos to my graphic job where I need to watch commercials to keep up with trends). Other items filed under office you can deduct as long as you purchased these items in 2008:
-Your computer
-Any software related to writing
-Printer
-Ink cartridges
-Printing paper
-Pens
-Notebooks
-Post-its
-External harddrive/flashdrive
-Blank CDs
-A new cell phone
-Scotch tape
-Packaging tape
-You also might be able to deduct cleaning supplies (paper towels, spray wipe, etc) if your accountant concludes part of your house/apt can be considered a home office
-Any items you may have shipped at the post office (or equivalent). This could be promotional items you mailed or packages you sent to your agent/editor
-Other misc office supplies. You know what these are. Paper clips, rubber bands, etc etc. A piece of advice. If you’re going to a store like CVS and need to buy pens as well as deodorant, pay on separate receipts. This way you can file away your office-supply receipt and not have to wade through each item and pick them out.

My rule of thumb is if there’s anything I’m unsure about, I write it down for my accountant and let him decide if it’s deductable or not. Err on the side of more deductions. Like the lottery, hey, you never know…

2. RESEARCH/EDUCATION

-Did you go to a conference this year? Everything you spent on it including travel, registration fee, meals, hotel, could be deductable
-Did you take any writing classes this year?
-Did you did you visit any sites related to your WIP for research. Example, let’s say your WIP has a scene that takes place at a concert and you went to a concert to research, you might be able to deduct the concert ticket cost. (There are rules for this, like you need to sell the book within 5 years of filing your tax form or something. So please double check with your accountant).
-Any writing books you purchased this year
-Any fiction books you purchased might also be deducted. It’s researching the genre, a writing style, etc.
-Did you purchase any DVD sets that influenced your WIP?
-Did you submit to any contests this year that had an entry fee?
-Did you submit any short stories that required a reading fee (like at Glimmer Train)
-Are you a member of SCBWI or RWA or an equivalent organization? They usually have an annual membership fee

3. TRAVEL
-Did you visit book stores, either for a signing, to introduce yourself, or to purchase books? You can deduct your gas/mileage possibly.
-Did you go to a far away conference? Hotel, plane fare, taxi fare, etc. All of it can be deducted
-Did you meet with your agent or editor and that required transportation?
-Did you go any place for research (like the concert), you can deduct travel expenses
-Did you meet up with a critique group in person?

4. MISC
In my industry, we have something called "working meals." If I am on site, and I need to buy my own lunch. It is considered a working meal. Did you ever write in a cafe and order something while you were there? That might be deductable.
-Did you ever go out to dinner with someone and discuss writing for the majority of the dinner?
-Did your critique group ever meet over food?
-If you were at a conference and you ate meals, those should all be deductable

5. MARKETING
-Do you have a website? If you do, you can deduct the design fee, the yearly cost of the domain name, and your internet hosting fee
-Did you pay someone to create a book trailer?
-Did you purchase any promotional materials? Like, did you have book marks or other kinds of swag made up?
-Did you mail arcs to reviewers? Deduct that cost
-Did you buy business cards this year?
-Did you buy any stock photos or stock music for your website/trailer?
-Do you have a paid Live Journal account? Or a similar account (photobucket, etc.)
-Did you take out ads anywhere, like on facebook or with google ads?

Anyway, if I think of more, I’ll update this. I’m sure more will come to me over the next few days. But here is a list to get you started.

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16 Responses

  1. Informative post! Thanks! Tax time is…well….taxing!

    I was told my an IRS employee that you could write off expenses even if you didn’t make money for the first three years. If, after, three years, no profit is made, then it’s considered a hobby.

    Also: I was told that legit cleaning supplies for office- and desk, chair, etc., could be written off even if you don’t declare a home office. It was explained to me something like this: I could be coming to your house every day to write in your spare room. I’d need above mentioned items…

    Like you said, if not sure, ask!

    Thanks!

  2. Great list – I’m going to have to print it out for reference. Here in Canada we can deduct expenses even if we haven’t made money — I think it’s contingent on actively trying to make money from your writing (seeking an agent, going to conferences, etc.) but it’s still a deduction. I’m definitely going to take advantage!

    • Man, I wish it worked that easily here in the US. Then I’d have a lot more to write off. I’ve been actively trying to make a career out of it for over three years now.

  3. I also go to the IRS website and read their publications for small businesses — they’re surprisingly easy to read and helpful! I recommend them to everyone, even if you do use an accountant just so that you know what you can and can’t do for your business.

    For example, you can’t take home office if you in any way use that space for something other than the home office (and in some instances I’ve even read that having a christmas tree in that room can count as not using it as a home office and make you lose the deduction for the year). Also, the IRS might have changed the reg and not updated the pubs, but you can’t deduct the first phone line into your house.

    There are also a lot of other random things you’ll find out — I love finding ways to deduct things while am simultaneously afraid of the IRS and an audit. Like, I talk to my fiance almost every night (and esp when we go out) about writing and books and plotting but I don’t think I’d be able to deduct those meals (and there’s only a certain percentage you can deduct for things like conferences, etc).

    Taxes… always fun and never easy 🙂 Thanks for the post!

    • Hmmm, I didn’t know that about the home office. I mean, I definitely use mine as my office, but since I’m in a one-bedroom, there’s really no way I could dedicate it only to work. I do have a desk that I only use when working, and I guess maybe that’s where the 1/3 part of the equation my accountant figured out comes from.

      I agree talking to your fiance probably wouldn’t count as a working meal. But that’s why I figure it’s just best to always ask in those circumstances. My accountant won’t file anything that wouldn’t fit with the IRS’s policies.

      Anyway, thanks for this info on all their updates. I’m scared of being audited too, but I do try to keep all my records so if it ever happens, it will be as painless as possible.

  4. So if you plan to leave on a Thursday, and have a business appointment on Friday, and then another one on Monday, you will have accumulated five business days, and can write off all expenses for them.

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