Grace Tam wrote an article in the CWC South Bay branch’s April newsletter. She received the information from Bonnie Lee who spoke at their March meeting. The IRS views writers as professional or hobbyist. “Professional writers write by day and night and can deduct all eligible expenses. Hobbyists have a day job unrelated to writing and write in their spare time. Hobbyists can deduct only the amount of expenses up to the profit made from writing– unless they go the extra mile to prove business intent.”
How do we prove business intent? By keeping records on all our writing activities including a mileage log and a separate checking account for writing. Keep all receipts during the year for all writing-related expenses, even announcements for writing classes, conferences, submission fees, social media set up fees, promotion costs, etc. And, of course, record the money you received for your writing. I was paid for my stories that were published in two anthologies. Not enough to cover my year’s expenses, but I consider myself a professional by the definition above, so I can deduct them all.
I was surprised to read that writing research trips are tax deductible even if our novel never gets published. However, we have to be able to show a copy of the manuscript, proof of an effort to get it published such as letters to agents, publishers, etc., and rejection letters.
Thanks Grace and Bonnie for clarification. Now I better get all those documents together before I see my accountant next week.
Useful information for all of us. I’ll print this off and keep it with my taxes. The hard part is disciplining myself to keep the appropriate records. Thanks.
Julaina – A few months back my Tax Professional told me there was little chance that I could claim anything until published. However, when I sent her your Taxpertise post, she said lthat I meet the criterion and should begin keeping a record of all my expenses. Thanks – This is great news..