But first let me preface this post by saying ...
I am not a CPA. I am not a Professional Tax Preparer. And I am not an Expert on the subject.
I am simply an author who is navigating the tax laws for the first time in her career, and I want to share a bit of what I've learned this year. :)
Tip #1: Keep your receipts for anything you've purchased in relation to your writing career.
This is uber important - because the last thing you need is to claim some costs that you cannot show proof of purchase for. Especially when it comes to Uncle Sam. ;)
Ideas for items you want to keep receipts for:
- Pens, highlighters, paperclips, etc.
- Any basic office materials that you use on a daily basis to get your work done with
- 3-ring binders, notebooks, etc.
- What do you use to store your printed MSS in?
- USB flash/jump drives
- It's a good rule of thumb to keep the receipts for every book you purchase. Regardless if it's a book in your genre for market research or a craft book to hone your craft.
- Associate and Membership fees
- My personal examples are my RWA membership and my local chapter memberships
- Conference and Travel Fees
- That trip to Colorado that I took last year for Immersion Master Class? Yup, I'm expensing the cost of the class, the flight, and the hotel charges. :)
- I plan doing an Immersion Class again this August, but this time it'll be in OH, so I'm going to make the drive from NC. And those miles are expansible for me also.
- Computer equipment
- Example: I bought a new laptop last month, therefore I will end up claiming part of this on my taxes for this year. :)
- Anything that goes in your writing space/office space. This can be as simple as lightbulbs for your desk lamp to your desk, chair, a new bookshelf, etc.
Tip #2: Become a good record keeper.
For authors, this should be the easiest task of all. We've already trained ourselves to be good record keepers when to characters - and their backstory - and our storylines - along with all the subplots. However, as easy as this may seem, it's hard to get in the habit of logging your records frequently ... because, ya know, if you don't do it at least once a week, the next thing you know you're gonna end up with two months' worth of receipts to record. :)
Tip #3: Create a system that works for you.
This is another incredibly important point. You'll want to find a system that will be easy for you to use, and one that you won't mind doing as often as once a week. For me that system was logging/tracking everything into an MS Excel spreadsheet. I have individual tabs set up within my spreadsheet. One for travel expenses, another for membership and conference fees, one for education fees (craft books & classes), one for books in my genre that I read for market research, one for office supply purchases, and so on, and so on, and so on. Then I have a nifty main tab that automatically adds up all those totals and summarizes the entire spreadsheet for my CPA. (Have I mentioned recently how much I love, love, love Excel??)
So find a system that'll work for you. Be it by hand, by spreadsheet, or by Word doc. Find something that'll keep you on track throughout the year.
Tip #4: Do your research on local CPAs.
When Writer-Husband and I chose our CPA, our first quest was to get a referral from the intelligent gentleman that we did our mortgage through. Our second course was to speak with any of our friends who own their own businesses and gain a referral from them, such as Writer-Husband's sister. So when it came down to making the choice, we checked out their websites, About pages and Bios, and then we had short conversations with the CPA to obtain their knowledge of tax laws as they pertain to authors. Through that process we discovered that the first one we called was incredibly knowledgeable, incredibly nice, and overall, the woman knew her stuff.
Hmmm ... then again she could've told us there are rainbows in hell and we might've believed her. ;) Just kidding! (Not really ...)
So do your homework. Find someone who's been in the business for at least 8-10 years. And check your local state's registered CPA database as well as your local Better Business Bureau. Oh, and you might also want to make sure that they do prepare taxes. I learned that not every CPA is willing to dive into Uncle Sam's pool.
Tip #5: For goodness sakes, do your own research as well.
So earlier when I said that our CPA could've told us there are rainbows in hell? Yeah, well I was seriously joking. I had done research. Then I did more research. And more research. That's what I had to do to even make sure that we were picking the right CPA.
Take being a writer as an example. You've done your homework, you've learned the craft and you live it every day. So what if you're talking to another individual who calls themselves a writer, but yet you've noticed that you ask them for a critique, it's like they can barely put two sentences together? What does that tell you? Exactly ... they're new to the craft and they've got some learning to do. It's the same concept with CPAs. So you gotta do your own research in order to help you weed out the inexperienced in tax laws for authors.
I suggest going straight to Google. When I Google "tax tips for writers & authors", the following are the first 5 sites that pop up:
- Scribendi - Tax Tips for Writers
- Publish Lawyer - Taxes and The Writer
- Ask CP Amoms - Tax Tips for Writers and Authors
- Taxes for Writers - Tax Tips for Writers - Use Google to Calculate Mileage
- Gordon Burgett's Blog - 2012 Tax Tips for Writers and Publishers
So there you have it. The tips I have to offer as an author navigating business tax filing for the first time. Again, I am not a CPA, nor a Tax Preparer, nor a professional in the tax industry. So please do not take my words to the bank. :)
What about you? What other tips do you have to offer authors regarding taxes? Anything I missed? Do you have a personal experience of your own that you've learned from and would like to share?