Kathryn Page Camp
Do you write as a hobby or to make a profit? The answer to that question determines whether you can write off excess writing expenses.
To deduct writing expenses that exceed your writing income, you must convince the IRS that you write to make a profit rather than as a hobby. There are two ways to show this.
If you make a profit three out of five consecutive years, the IRS will presume you are writing to make a profit. That means you can deduct the excess expenses in the two losing years.
But most writers can't predict whether they will have three out of five profitable years. No problem. The second way to show the IRS that you write to make a profit is by treating writing like a business. Here are some tips on how to do that.
- Follow established accounting and recordkeeping practices and comply with legal requirements. You should maintain detailed records of your writing income and expenses and keep them separate from your personal finances. It also helps to keep non-financial records of you writing activities (e.g., a submissions log). If you sell your books at speeches or fairs or from the trunk of your car, make sure you have the necessary business licenses and pay sales taxes to the state.
- Gain the expertise to succeed as a writer. This has two prongs: training and expertise in writing itself (e.g., attending writers' conferences) and expertise in the subject you are writing about (research, research, research).
- Write regularly.
- Submit your work to paying markets. It's okay to submit to non-paying ones occasionally, especially if you do it to gain exposure, but you should concentrate your efforts on paying markets.
- Don't avoid the parts of the business that aren't fun. For me, this means forcing myself to spend time on promotion.
There are also three sure-fire ways to convince the IRS that you write as a hobby.
- Write only when the spirit moves you. (The converse of "write regularly.")
- Write, but don't submit.
- Self-publish, but don't promote.
So if you want to deduct your excess expenses, make sure you treat writing as a business.
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Kathryn Page Camp is an attorney who writes as a business. To discover more about her, check out her website at www.kathrynpagecamp.com.