The Business of Writing: Personal Income Tax Reporting for Authors

Venice, Italy-February 26th, 2011.
Person wearing Venetian Carnival mask,
c2011 by razvanphoto.
Depositphotos ID 9047805, Editorial license.

I'm sporting my pretty mask again to discuss an ugly subject: income tax reporting for authors. 

I make no apologies for today's topic; it's one of those disgusting but necessary chores, like spring cleaning, that must be done every year. Unless you happen to be like my late father-in-law, who left three years' worth of unfiled income taxes for his executor and assistant executor (*user waves and smiles only because all that unpleasantness is over, thank God*) to deal with.

All my tax reporting is done for the year, including the requisite state filings. If you cannot make a similar claim, then I suggest you get cracking: you have no more than 9 calendar days to make the deadline. Since April 15 falls on a Friday this year, there's no temporary reprieve either.

Furthermore, if you have incorporated your writing business but haven't yet filed your 2015 corporate taxes, you're at least three weeks late. Before you panic, I invite you to head over to this blog post, where I talk about corporate tax filing.

What to do about that overflowing shoebox of expense receipts? Again, don't panic. Check out this blog post from August 2015, wherein I offer suggestions about how to record and classify expenses.

On the income side of the paperwork pile, by now you should have received one or more 1099-MISC paper or electronic royalty statements from every company who paid you for the books you sold in 2015. These all get reported to the IRS, so if you mislaid or didn't happen to receive one for a particular income source, but you recorded the deposit in your checkbook or ledger, then you need to factor it into your total royalty income.

What I did a year ago, in terms of income tax reporting, is a blur because of having to file the last of my late father-in-law's estate income taxes, but I surely don't recall Amazon as having sent out password-protected 1099-MISC PDF files for all the various business units around the world where I sold copies of my books.  And a mind-numbingly cryptic password, at that.

Do I care if anyone hacks my computer to learn that I got a $5 refund in VAT from the European Union last year? Not particularly, but there you have it. Annoyance on the half shell, courtesy of Big Brother Amazon. :-P

By the way, if you got paid in US dollars by an e-tailer (Amazon, Nook Press, Draft2Digital, etc.) for book sales made in foreign countries, then you don't have to report it as "foreign income," and thank God for that minuscule mercy. My husband inherited a few foreign stocks from his father, which we dumped as soon as humanly possible so we wouldn't have to worry about that tax rathole.

Also, if you have incorporated your writing business and filed corporate taxes, then the data reported on the subsequent K-1 should flow into your IRS 1040 form in the appropriate areas. Don't ask me offhand which specific areas those are—I've been using TurboTax for more than 20 years, and I pay good money for the software to remember those bazillion details for me so that I don't have to. :D

It's never too late to establish a system of business income/expense organization and tax reporting that works for you. The good news is that once you've invested the thought, time, and effort to set it up, maintaining it on a regular basis is much easier.

Good luck, and may you earn enough from your refund to finance your next writing project!

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