While building one’s career as a self-published author can be exciting and rewarding, there’s one necessity that some of us might overlook while building our writing empires: those pesky taxes. So what are the tax basics for self-published authors in 2019? When you’re self-employed as a writer (or making money from selling books on the side), different state and federal tax rules apply—and you don’t want to cut corners. You will regret it with the IRS later—we’ve heard some horror stories!
Midnight Publishing has been working with entrepreneurs and authors for nearly a decade, but we’re not only passionate about writing and editing. We also want to encourage our clients to protect their work and instill good habits as their careers flourish in the years to come! Below is some basic information on the tax basics for self-published authors in 2019.
Are you a small business owner? In the eyes of the IRS, yes!
That’s right—the Internal Revenue Service attributes self-published book sales as freelance income/self-employment income. So what does that mean? You haven’t yet paid taxes on the books you’ve sold, and you’ll need to report your earnings in your tax paperwork in something called a Schedule C.
What’s a Schedule C?
A Schedule C is a form provided by the IRS in which a sole proprietor—you, the small business owner—must report your total income (or losses) for the previous year. There are five parts to a Schedule C:
Part I: Listing all income of your business for the previous year and calculating gross profit.
Part II: Subtracting all of your business expenses (aka “deductions”) to calculate net profit (or loss). This is what is reported on the tax return.
Parts III through V: These only need to be completed if you have purchase inventory, need to claim car expense deductions or any other expenses that weren’t included in Part II.
What are common deductions self-published authors can use for their Schedule C?
- Your website—all costs incurred to launch and maintain your website, domain name, etc. are all deductible from your taxable income.
- Business travel—writers’ conferences, traveling to locations for book research and book promotion tours and signings are all tax-deductible, including airfare and hotels. Special note: meals are only 50 percent deductible.
- Professional services used in the publication of your book—the fees from editors, cover designers, formatters and website designers are all applicable!
- Home offices are deductible, if you qualify under these guidelines.
- Internet bills.
- Office supplies—your printer, ink, folders, pens, notebooks, etc.; any supplies you need for writing purposes.
- Subscriptions to writers’ magazines, websites, etc. and any other purchases made for research and the execution of your books.
- Anything that is deemed “ordinary and necessary” per the IRS in running your writing business, per these guidelines.
For more details on filling out a Schedule C, check out this link, and find general tax tips for self-published authors and freelancers here.
Midnight Publishing is an editing, ghostwriting, and marketing company based in Phoenix, Arizona with a passion for assisting entrepreneurs and writers to make their words shine. We offer a wide variety of editing and writing services from industry professionals. We would love to hear about your book project or idea—and be sure to check out our specially curated 2019 publishing guides at a discounted bundle rate!