Before 2009, I don’t think I earned more than $100 in writers’ expenses. Now, I expect to earn $200 (Okay, maybe slightly more. You get the point!). The answers from the original post were so helpful that I thought it best to highlight them in hopes of sharing best practices.
Most everyone agrees that keeping track of all writing-related expenses and using an accountant are good rules of thumb. Are there other methods out there that we’re overlooking? What’s the most interesting writer expense that you’ve claimed on your taxes?
Feel free to add to this post. These are the conversations we don’t have with each other—the business of being a writer.
Bernadette Geyer said...
I use Quicken to track everything. I deduct postage, office supplies, membership fees, contest entry fees, and the cost of attending writer's conferences (when I do attend). You could even deduct the cost of traveling to give readings.
Sandy Longhorn said...
I try to keep everything in Quicken, but I also go old school with two file folders: one for writing expenses (all those B. listed) and one for income (honorarium, payment for poems, contest awards, etc.). Between the two methods, I think I catch just about everything. Plus, you need to keep hard receipts of everything you are claiming (I think for 5 years...but I'm not sure on that one).
I keep my finances for poetry separate, but also do this very easily. Here are the key steps, all you need is 2 folders...
a) Keep a folder somewhere we you other documents (bills, poems, etc.) marked Writing Receipts 2010
b) Money Received 2010 - Writing Folder- This is where you put notes or receipts from all the money you have earned (in book sales, honorariums, etc.) over the year
c) Inside that folder have a piece of paper that says "Mileage" with dates/where/what etc. to keep track of all reading/writing events.
d) After 12/31, take both folders are add up your mileage, how much you made, how much you spent. That is what you use on your taxes.
Hope that helps... and oh, I also agree with Bernadette, keep track of everything! I do that as well.
As for finances, I have a separate checking account through which I try to do the vast majority of my writing-related expenses. I've also signed up for mint.com to help me manage things better.
And I keep a small plastic expandable file which I stuff with receipts to help come tax time!
Writer Bug said...
As for taxes, I, like Bernadette, treat creative writing like I do freelance writing and write off many expenses. I write off: all books (as I understand it, they count as research materials), writing conference attendance/travel expenses, postage, computers and software, and printing expenses.
Like Kells, I just have a folder that I throw receipts into throughout the year, and then I tally it up in January and February.
One of my two day jobs is as a tax accountant. OK, not strictly as a tax accountant as I am not officially qualified, however I do most of the work and my boss signs it off. I do think it is a good idea to get an accountant to do your tax if you are not sure. Find one who deals in small businesses, they are way cheaper than the big accounting firms. To get the best from your accountant, keeping your records tidy will save him/her time and you money. A separate bank account for business is a good idea, as otherwise the accountant will need extra time to separate business from non business expenses. Rather than stuffing all the receipts in a big envelope, filing them in date order can be helpful. You can record the details of expenses on a spreadsheet like Excel, or in a paper cash book, or write alongside each item on the bank statement - however you do it, just make sure the item is well described so your accountant can decide whether it qualifies.
There are also things like depreciation on your fixed assets which I am guessing would mainly be your computer. Cost of your internet access, home phone, office space - find out what the rules are in the US, in New Zealand you can claim 50% of your phone rental if you are working from home (plus the total cost of work related toll calls) and for use of a home office, if you have a separate room that you use for writing, you can claim a percent of power, mortgage interest or rent, insurance, etc based on the floor area of your home office space (but working on the dining room table doesn't qualify!)
I don't know what the rules are in the US but you can see why an accountant can be helpful if you are not sure - get an accommodating accountant and they will show you to help you keep the costs down by supplying them with well prepared information.