Online Writer's Conference 2003

Shades Of Romance Magazine

August 3-9, 2003















Taxes and the Writer


Bettye Griffin


Once you decide you're a writer (not an aspiring writer or a wannabe writer, but a writer, period,) it's never too soon to develop professional habits.  Organization is one of those things that you either possess a natural affinity for or you have to struggle to attain.  Just think of what would happen with all that junk mail you receive if you didn't keep a handle on it. 

The first thing that comes to mind when one thinks of taxes is the Internal Revenue Service (IRS,) and with good reason.  These are the folks who make all the rules, and they have lots of them.  The American tax system has been described as the most complex in the world.  One of the most important IRS rules pertaining to the writer is that expenses related to hobbies are not tax deductible, but expenses related to business are deductible on Schedule C (Profit or Loss from Sole Proprietorship.) 

The IRS also has specific criteria to determine if an individual's activities are a hobby or a business.  The best way to learn their current policy (they do revise tax regulations periodically) is to call or visit them and ask for a booklet on this subject.  The IRS publishes many booklets to help with individual tax questions, and they are all free. 

If you can prove you are making a sincere effort to make money at what you do, you can probably identify yourself as a business.  However, the IRS will not allow anyone to claim losses year after year.  Make sure you know the limit before claiming losses in two consecutive years.

Expenses can be more than you think.  Postage costs money.  Those guidebooks that explain the difference between 'that' and 'which' and other common writing errors that make editors pull their hair out (and wish they could pull yours out) cost money.  Paper and ink cost money.  Envelopes costs money.  And gas for all those trips to the post office and office supply store costs money.

Published writers have all the above expenses and more.  Many writers have web site design and maintenance to pay for, long distance expense for calls to agents and publishers (perhaps not as prevalent nowadays due to cell phones that include nationwide calls,) business cards and other promotional material, agent commissions, P.O. Box rentals, etc.  Of course, the published writer is getting good, old-fashioned currency for their efforts. 

Writers are paid the sums indicated in their contracts.  No withholding for Federal, FICA, or state and city taxes (this latter item most common in New York City and various communities in Ohio and Pennsylvania.)  The responsibility for remitting your withholding taxes to the government is yours.  The IRS are generally an amiable bunch, but they don't look kindly on large tax bills.  Anyone finding himself or herself owing more than $500 at tax time will be hit with one a penalty for inadequate withholding.  This can easily be avoided by making estimated tax payments on April 15th, June 15th, September 15th, and January 15th (for the fourth quarter of the previous year) of each year.  The amount you withhold from all payments you receive will depend on how high your offsetting expenses are and the amount of your individual or, if married, joint income, but 15%-20% is usually about right.  In addition to Federal tax, this will also go toward your FICA bill.  That's right.  The amount withheld for FICA, presently 7.65% of W-2 earnings, is only half of what's due.  Your employer pays the other half, but when you're a writer or other self-employed person who receives a 1099 rather than a W-2 you have to pay it.

Handling one's own withholding takes real discipline.  I sock mine away in a special reserve savings account at my credit union used exclusively for this purpose until it's time to remit.  Those dates are embedded on my brain, even years after my corporate days in payroll, but you might want to keep a reminder somewhere prominent.  The IRS will send you payment coupons upon request, and once you begin making estimated payments they will automatically issue them to you.     

The best way to begin is to keep good records.  If you're like me, at tax time you're an accountant's nightmare.  I toss all my receipts into a 10 x 13 manila envelope after I mark what it's for (I work as an independent medical transcriptionist and file two Schedule C's each year, so I have to differentiate between these expenses and those associated with writing).  I also re-write the total and the date, as receipts can and do fade.  Unfortunately, I am my own accountant, with the help of a tax program, so it's myself I risk giving a stroke to each year.  But if it's in an envelope, you can't lose it.

Some expenses you can't keep on receipts, like mileage.  I keep a mileage log and a pen in my Day Planner, which goes everywhere I go.  Whenever I get behind the wheel to go anywhere related to writing, the starting and end mileage get written down.  Last year I logged over thirty miles as I went from store to store in search of the perfect new chair (it had to be brown or butterscotch leather, had to have excellent low back support, had to have arms, the wood finish had to be in a shade compatible with the oak of my desk, and its back had to be taller than my head so I could snooze or just sit back and daydream,) at the best price, hitting all the office supply stores in the area and then going back to get the one that was the best value.  The IRS allows thirty-some cents per mile, and you'd be surprised how quickly this adds up, so be sure to take advantage of this benefit.

Promoting a book often means travel.  While it's best by far if someone picks up the tab (especially with limousine transfers, so people can look at you and try to figure if you're Angela Bassett or some other well-known person,) with most publishers cutting back these days you might well find yourself on your own.  If you drive ten miles to do a book signing at a local bookstore or to the local TV station for one of those interviews that add ten years to your face and twenty pounds to your body, your mileage and any parking expenses you incur are deductible.  If you drive far enough to require an overnight stay, mileage and any parking fees are also deductible, and so is the cost of your hotel.  Food works a little differently.  Using the logic that a person has to eat anyway (and who can argue with that,) the IRS only allows you to deduct a percentage of what you spend. 

Something that gets complicated is the home office deduction.  Many part-time writers don't even bother with this.  I am not a full-time writer, but virtually all of my income derives from my output from this base, and I spend a tremendous amount of time there (which is why I insisted on an extremely comfortable chair.)  The most basic IRS rule regarding home offices is that the space must be a separate room, with its own door, rather than a corner or part of another room.  If your office has a closet, it should only contain office-related items.  No stashing golf clubs or Christmas decorations in there.  The IRS has been known to send people out to take a look.  My office includes a stepper so I can get off up my ever-expanding butt and do some physical activity.  I also keep a TV in there, and while I did come up with a fake pregnancy subplot for my second novel, A Love of Her Own, from a Lifetime movie I was watching while working on my outline, neither the TV nor the stepper were deductible.  But because the computer and four-in-one printer/copier/fax/scanner is used exclusively for work (transcription or writing,) its cost was deducted.  Because I am required to have the faster and thus more expensive DSL Internet connection to download voice files for my transcription, the entire cost is deducted.  I figured out that my office takes up 12% of the total square footage of my house (not including the garage) by proportionally estimating the space of each room.  I then deduct 12% of my mortgage payments for the year, 12% of the electricity, and 12% of the alarm monitoring.  Costs associated with the second line for my fax and DSL connections are completely deductible.  This gets complicated because it will affect you when it comes time to sell your house, so consult a tax professional. 

When in doubt, remember that honesty is always the best policy. Use common sense.  No deducting travel expenses because you went to an out-of-town funeral and people bring books to the luncheon for you to sign.  No deducting a percentage of your water bill for your home office.  If you truly are unsure, help is just a phone call away.   

Bettye Griffin is the author of six novels, the latest of which is Closer Than Close.  You may contact her at, or visit her web site at