I know that published authors can declare all of their expenses (mailings, phone calls,
editing, copies of manuscripts, etc), but, can an unpublished author do the same? What I mean is, I have written a manuscript, unpublished, but can I still declare all of my expenses in my taxes?
Truly, I'm stumped. Part of me wants to say, of course, because there are a million waiters/aspiring actors out there who have yet to land a part, but who, I'm sure deduct their headshots, but part of me also thinks that this is a slippery-slope. I mean, what if I wanted to become a professional hang-glider? Can I deduct the purchase of said hang-glider? I doubt it.
So, really, I don't know. I went here: http://www.irs.gov/faqs/index.html#12, but couldn't find any clear answers.
Thus, I'm putting this up on the board in case someone has a wise answer. My wisest advice? Speak with your accountant. Because God knows, you don't want the IRS chasing you down over the cost of a stapler when you should have just forked over the money in the first place.
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5 comments:
I'm not a tax expert, but I think you can deduct expenses for a business that isn't making money for three years; after that, the IRS considers it a hobby. But you probably want to run this by an accountant before writing off that new $7,000 laptop!
Trish :)
www.trishryanonline.blogspot.com
You have to file a Schedule C.
I deducted all of my mailing costs, paper, office supplies, magazine subscriptions (RT), contest fees etc when I was unpublished.
Just keep in mind the chances of an audit are high so keep scrupulous records.
I did find this......
http://www.absolutewrite.com/freelance_writing/tax_tips.htm
*disclaimer: I am not an accountant LOL
Thanks, guys! I'm sure the person who asked the question will find this most helpful. (And I learned something too!)
Trish -
Actually writers and creative artists are handled slightly differently than standard businesses because of the time frame for developing and selling their work. I believe creative artists and writers have a 7 year or 10 year time frame. You would need to check with your accountant for sure. But, I can tell you it's probably not the - must make profit - 3 of 5 years like standard businesses. Also, as Amie said, you need to be very careful in documenting your expenses. In particular, the home office deduction is an audit flag. I have never used that even though I am fully entitled to it because the record keeping and paperwork just isn't worth the 200 or 300 I might save in taxes. Especially, when you compound that with the possibility of an audit. An audit could taked hours or days to prepare for. Your hourly return on that investment would be like 5.00/hr at best in a worse case scenario.
On Schedule C you need to type in the type of business you are running from a long list of business codes. This code is a business classification for the IRS and determines the type of business and time frames that will apply. Usually 3 years, except in the case of creative artists, horse show people etc.
You can do some searches on this. Also, JK Lasser's usually has some good info as well as higher additions of Turbo Tax.
Another piece of advice- keep track of all your efforts to submit/sell. Your ability to show that it is a business versus a hobby is often key.
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