Friday, October 14, 2016

Don't Let Those Taxes Confuse You!

by bestselling author Jean C. Gordon.

You asked.... We answered! Earlier this summer folks wondered about taxes, and so I went to our go-to gal who's got her finger on the tax pulse... but talks CAREFULLY because situations differ! Jean C. Gordon is experienced on both sides of the aisle, as a financial consultant... and a published author! Perfect day to pick her brain and get our affairs in order!

I’m going to start by thanking Seekerville for inviting me to visit. Then,
I’m going to let you in on a secret. I like taxes. Not paying them, but planning for them and doing income-tax returns. I gladly do all my immediate family members’ returns every year gratis. But it’s October, not April, you may say. Why are you talking about taxes? Because the last few months of the year are a great time to review your tax situation to make sure you’ll be able to take advantage of all the tax opportunities available to you as a writer when you have to file your federal income-tax return next spring.

To help with your review, I’ve taken my professional financial planner cap off the closet shelf, where it’s been since I left my day job a year and a half ago to be a full-time author, and am sharing my “Romancing the IRS,” a presentation on taxes that I’ve given to numerous writers groups.

Is Your Writing a Business?
Before you can look at your business tax situation, you need to determine whether your writing is a business or a hobby. Business losses are deductible. Hobby losses are not. If the IRS determines your writing is a hobby, you can only deduct expenses up to the amount of income your “hobby” produces. That said your writing doesn’t necessarily have to produce a profit every year to be a business. One rule of thumb is that your business should have produced a profit in three out of the past five years.

However, whether or not an endeavor is a business is not simply a matter of numbers. Rather, the IRS uses a facts and circumstances approach, generally considering nine factors. No one factor is controlling, and other factors may be considered. Your tax review mission is to look at these facts and circumstances:
$        How you approach writing (for example, to you look at it as a means to earn money and takes steps to improve your writing)
$        Your writing expertise
$        Time and effort you put into writing
$        Success with similar activities (For me the fact that I was employed as a tax and financial writer was a plus.)
$        History of income or loss
$        Amount of profits
$        Expectations that assets will appreciate
$        Your financial status (Having other employment that “pays the bills” can be a minus if your writing isn’t making a profit.)
$        The pleasure or recreation involved (Not that you shouldn’t enjoy writing, but if all you do is attend  and deduct the costs of conferences in fun places, you may fall down on this one.)

What’s Deductible?
You’ve determined your writing is a business, so what can you deduct? You can deduct ordinary and necessary business expenses. The following are common (but necessarily all) business deductions you may be able to claim:
$        Professional fees and dues, including Romance Writers of America (national and chapter dues), American Christian Fiction Writers, Mystery Writers of America, Sisters in Crime, and other writers groups
$        Continuing education costs
  College courses
  Online courses
  Materials and supplies
  Photocopy expenses
  Books for research (but don’t write off every fiction book you buy)
  Conference/Seminar fees
$        Advertising expenses (including reader giveaways)
$        Telephone expenses (for your business)
$        Supplies
  Business cards
  Website development and hosting
  Computer software and supplies
  Internet connection/use charges
  Postage and shipping
  FAX supplies
  Photocopy expenses
  Equipment repair
  Gifts and greeting cards (to your editor/agent, for example)
  DVDs, files and videos for research
  Clerical help
$        Car travel expenses
  Between jobs or locations
  Publisher/agent meetings
  To purchase supplies
  Professional society meetings
  Related parking fees and tolls
  You can track and claim your actual expenses or claim 54 cents per mile (in 2016; reviewed annually)

$        Out-of-town travel expenses
  Airfare (only yours, not family members who are traveling with you, unless they’re with you as your employee)
  Car rental, taxi, bus, train
  Parking and tolls
  Lodging (Your room only; family members may stay in the room with you but you can’t deduct additional rooms for family member, unless they’re with you as your employee)
  Meals (only yours, not family members who are traveling with you, unless they’re with you as your employee)
  Phone calls
$        Equipment purchases
  Cell phone (for your business)
  Copier, calculator
  Computers and printers
  Computer peripherals
  Desk and other office furniture
Under the tax law, your costs of these types of equipment are generally depreciated over five or seven years, meaning you have to spread your deduction over several years. But you have an alternative. You can elect to use so-called Section 179 expensing. By using expensing ,you generally can claim the costs of up to $500,000 (in 2016) of new and used equipment you purchase and put into service by the end of the year on your 2016 tax return, rather than over time.
If you want to offset 2016 business income and potentially lower your tax bill, you might want to buy equipment you are thinking about buying early next year before year-end and use expensing. That way, you could deduct the full cost in 2016.
$        Self-employment taxes (more on this later)
$        Premiums for medical, dental, and qualified long-term care insurance for yourself, your, spouse, and your dependents
$        Retirement plan contributions (self-employed plans, other employer-provided plans, and individual retirement accounts)
If you want to reduce your taxes for 2016, consider increasing your deductible retirement plan contributions before year-end.
$        Home office expenses (based on the percentage of your home the office represents)
  Deductible mortgage interest
  Real estate taxes
  Homeowners insurance
  Repairs and maintenance

Does My Writing Space Qualify as a Home Office?
The home office deduction is available for homeowners and renters and applies to all types of homes. The first requirement to claim the deduction should be easy to meet. You must show that you use your home as your principal place of business. Next, you must regularly use the part of your home you want to claim as your home office exclusively for conducting business.

For instance, if you use an extra room to run your business, you can take a home office deduction for that extra room. However, if that room is also your guest bedroom, the office part of the room must be distinctly separated from the bedroom part, and you can claim the deduction only for the office part. You also can deduct expenses for a separate freestanding structure, such as a studio, garage, or barn, if you use it exclusively and regularly for your business.

Generally, deductions for a home office are based on the percentage of your home devoted to business use. So, if you use a whole room or part of a room for conducting your business, you need to figure out the percentage of your home devoted to your business activities. You also need to keep accurate records of all deductible home office expenses (listed above). Sound complicated? It is. However, the IRS offers a simpler way you can choose to figure your home office deduction.

Basically, you figure the square footage of the space dedicated to your business office (not to exceed 300 square feet) and multiply it by five dollars. Your deduction cannot exceed your gross income from the business use of your home less your other business expenses. With this method, you cannot deduction depreciation in the office space. You can deduct the home mortgage interest attributable to your office space in your personal deduction for home mortgage interest. You’re free to change the way you calculate your deduction from year to year.

As a Self-employed Person, What Taxes Do I Have To Pay?
Like everyone else, self-employed people have to pay federal income tax (and state income tax, if applicable) on their earned income. You also have to pay the so-called self-employment tax. Simply, this tax includes the combined amount your employer and you, as an employee, would pay on your income on your behalf for Social Security and Medicare. In 2016, you have to pay 12.4% Social Security tax on up to $118,500 of net writing income (basically, after business deductions), if you have no other earned income. You have to pay 2.9% Medicare tax on all of your earned income. (Individuals with earned income greater than $200,000 (single) and $250,000 (married-joint) pay an additional 0.9% Medicare tax.)

The $118,500 income limit on earned income subject to Social Security tax applies to your total earned income from writing and other employment. For example, if your wages are $78,000, and you have $40,700 in net earnings from writing, you don’t pay dual Social Security taxes on earnings more than $118,500. Your employer will withhold 7.65% in Social Security and Medicare taxes on your $78,000 in earnings. You must pay 15.3% percent in Social Security and Medicare taxes on your first $40,500 in self-employment earnings and 2.9 percent in Medicare tax on the remaining $200 in net earnings.

If you haven’t looked at your writing income for the year and considered your possible tax consequences, now is the time. Your professional tax advisor can help. Or, if you used one of the popular tax programs for your 2015 tax filing, it probably gave your average ordinary income-tax rate. Use that rate and the self-employment rates to get an idea of your 2016 tax liability for your writing income. Personally, I use TurboTax Tax Forecaster (free) and Quick Books Self-employed computer programs for a quarterly picture of my income and tax standing. I’m sure there are other programs and apps you might use.

To take care of your self-employment and income tax on your writing income, you may need to make estimated tax payments. If you have a day job, too, you have an alternative. You can have your (or your spouse’s) employer increase withholding on those wages to cover taxes on your self-employed writing income as well as taxes on your wage income. Similarly, if you’re an older writer, you can choose to adjust the withholding on your Social Security benefit payments and retirement plan withdrawals to cover taxes on your writing income.

Generally, taxpayers have to pay equal estimated tax payments, and the IRS can charge an underpayment penalty for any quarter your payment is short. But if you receive income unevenly during the year, as authors usually do, you may be able to avoid or lower the penalty by annualizing your income and making unequal payments. Electronic Federal Tax Payment System is the easiest way for individuals and businesses, alike, to pay federal taxes. Tax payments are due:
$        January 15 (Sept. 1 to Dec. 31)
$        April 15 (Jan. 1 to March 31)
$        June 15 (April 1 to May 31)
$        Sept. 15 (June 1 to Aug. 31)

When the due date for an estimated tax payment falls on a Saturday, Sunday, or legal holiday, the payment will be on time if you make it on the next day that is not a Saturday, Sunday, or a holiday.

If you don’t pay enough tax throughout the yeareither through withholding or by making estimated tax paymentsyou may have to pay a penalty for underpayment of estimated tax. Generally, most taxpayers will avoid this penalty if they owe less than $1,000 in tax after subtracting their withholdings and credits, or if they paid at least 90% of the tax for the current year, or 100% of the tax shown on the return for the prior year, whichever is smaller.

Now for my closing disclaimer. This blog is for informational purposes only. To the best of my knowledge, the information I’ve presented is correct. However, it should not be taken as tax or legal advice. Before taking action on any of the information I’ve presented, talk with your professional tax advisor.

Any questions? I’ll be around for most of the day to answer any general ones I can. And by asking (or otherwise commenting), you be entered in my giveaway of one print (US only) and one eBook copy of Mending the Motocross Champion, the first book in my new Team Macachek series.

For Amazon bestselling inspirational and sweet romance author Jean C. Gordon, writing is a natural extension of her love of reading. From that day in first grade when she realized t-h-e was the word “the,” she’s been reading everything she can put her hands on. She and her college-sweetheart husband tried the city life in Los Angeles, but quickly returned home to their native small-town Upstate New York, where she sets her books.

They share a 175-year-old farmhouse just south of Albany, NY, with their daughter and son-in-law, two grandchildren, and a menagerie of pets. Their son lives nearby. While Jean creates stories, her family grows organic fruits and vegetables and tends the livestock de jour.

Jean is currently celebrating last week’s release of Mending the Motocross Champion, finishing Holiday Escape, a Team Macachek novella, and working on a new series for Harlequin Love Inspired. Connect with Jean on Facebook, Facebook/, as @JeanCGordon on Twitter, or on

New Release Giveaway
Physical therapist Dana VanAlstyne’s dreams of a family were lost in the dust of a motocross racecourse. Although she’s filled her life with her work and church activities, it hasn’t filled the empty space inside her. Nor has it eased the heartache of being abandoned by a man who wasn’t ready for a wife and children. Now her dream is to open her own private practice. All she needs is the capital to make that happen.

Anton, “Mac,” Macachek may be the top professional motocross racer in the country but he still has one race that matters more to him: winning a championship at Unadilla Raceway and showing the hometown folks the bad boy did amount to something. But when a horrific accident sidelines those plans, he makes a deal with the woman he once loved with all his heart. A woman who abandoned him. If Dana will get him back in racing shape, he’ll fund her new practice. Then an even more dangerous risk is revealed. If Mac races again, he could die.

Does Dana have enough faith to risk her heart again? She loved Mac once, but feared he loved motocross racing more than he loved her. If she helps him mend his broken body, will it also mend her broken heart? Or will it all be lost again in the dust and danger of a motocross racetrack?

TEAM MACACHEK: Meet the strong women and fearless men of the motocross circuit.

Amazon, Nook, Kobo, and iBooks buy links:

Ruthy here! We've got birthday cakes today! Yes, we have banana split cake, banana cake, spread with pineapple and strawberry fillings, layered with fresh whipped cream and drizzled chocolate glace..... And for those who aren't into fillings, we've got Angel Food cake slices, sweet and simple! Stop in, let us serve you a cuppa and some cake.... and some financial conversation!!!


Marianne Barkman said...

Welcome to Seekerville, Jean! WOW That reads like a farmer's financial planner list. Only problem was, when we retired, the government took so much more out of our profit that after two years we have to go back to work.
My extreme sport is reading about extreme sports. I would love to read your book. Thanks for the chance!
And RUTHY i' ll have a piece of each! One for Seekerville's birthday and one for mine which is still coming up!

Mary Connealy said...

Great post, wonderful and specific details.
My Cowboy is self-employed, a cattleman and he also has row crops and hay, so acres of land in production, besides the land we use for pastures.
My Cowboy had been at this all his life...keeping records for his own taxes.
Now he keeps track of mine, pays bills for writing...I do some of that but I make sure he knows...and he pays my quarterly income taxes. The rules for authors with a home office are a nice clean echo of the rules for land owners working in agriculture.
So we know how to do this correctly, even so, you brought up a few things I'm going to ask him about. They're not clear to me but I'll bet he knows just what you're talking about. Thanks!

Tina Radcliffe said...

Welcome Jean! I just printed this off. You noted a few things I overlooked. THANK YOU!@!!

Trixi said...

Two sure things in life....death and taxes! We have our H&R block lady do ours each year so we know they get done right.

We're not self-employed or have our own business & I can't imagine trying to figure all that financial stuff up by ourselves!

So I'll just stick with eating cake and having a cup of coffee....those two things I CAN understand, lol! Your book sounds interesting, never read a fiction book with a daredevil motor-cross racing hero before. Would be a nice change of pace :-)

Just Commonly said...

Hi Jean! Welcome to Seekerville and wow! Thanks for such an informative post. As a freelance designer, it works the same way. I file as self-employment and usually let my accountant takes care of the details. I do know I need to keep track of all expenditures and deductibles. And many times it gets confusing. I guess as a author, there's a lot to account for as well.

Thanks again.

Wilani Wahl said...

I have been wondering since I am on social security I do not have to pay the event I publish will I then have to pay taxes.

Tina Radcliffe said...

Jean, do you ever do an online workshop on this topic? You'd have a sell out crowd. Let us know and we will happily advertise in Seekerville.

Mary Preston said...

Yummy cakes to counteract the dreaded taxes. Most times I seek professional help.

Marianne Barkman said...

Any ideas of how I can turn my hobby of reading into a business?

Fedora said...

That is some super suggestions and advice, Jean! While I'm not an author, I should definitely read through this carefully to see what applies to me as a freelance editor! Thank you for the time and effort in sharing your wisdom!

Cindy W. said...

Thank you for the post Jean. I do my husbands taxes every quarter (self assessed) and I really don't enjoy doing them but they are easy to do, have to be done, so I do it.

Happy Birthday Seekerville!

Cindy W.

Ruth Logan Herne said...

Marianne, I am happily delivering both to you!!!! And I hear you on the tax issues. OUCH!!!

Ruth Logan Herne said...

Cake and coffee are never bad things, Trixi! And I love the idea of a Motocross hero!!!!

Ruth Logan Herne said...

I am totally leaving this numbers game to Jean, Wilani!!!

Ruth Logan Herne said...

Fedora, yes! Like Mary said, a lot of this applies across any self-employment... although Jean will be better equipped than me to handle the answer because she's smart... but I make GREAT CAKE!!!

Ruth Logan Herne said...

Bless your heart!!!! You are a dear, dear woman, Cindy!

Jackie said...

Good morning Seekerville,

Jean thanks for this helpful information. Because my first novella came out this year, I actually need your information. And you sure gave me a lot to consider. Thanks again!

Jackie said...

Good morning Seekerville,

Jean thanks for this helpful information. Because my first novella came out this year, I actually need your information. And you sure gave me a lot to consider. Thanks again!

Debby Giusti said...

Jean, thanks for being with us today! Great information. So you're a math gal and an English guru? I'm in awe...and so not a math person. Although I do compile my tax info each April and give it to our tax person. I keep a folder with all receipts and never deduct anything unless I have that receipt. I also keep a mileage log in my car. As you mentioned, I should deduct mileage for business-related shopping trips, but I always forget to do so. And I don't deduct anything for my home office. I've heard it gets iffy...and I don't want an audit. :) Perhaps I'm being too cautious.

Jean C. Gordon said...

Marianne -- Maybe if you can get someone to pay you more for the books than you pay for them. :)

Jean C. Gordon said...

Wilani -- You might. It would depend on whether your net (after deductions) income exceeded the Standard Deduction amount or the amount of your personal Itemized Deductions plus your personal exemption(s). The Standard Deductions for 2016 are $6,300 for single filers, $12,600 for joint filers, and $9,300 for head of household filers. The Personal Exemption is $4,050. If you're over 65 or blind, you get an extra $1,250 exemption; $1,550 if you file as a head of household.

Jean C. Gordon said...

Tina -- I've only done it as an in-person workshop. I'll have to think about that online thing.

Jean C. Gordon said...

Mary -- For a lot people, your way is the best way. But, it can help to know what records to be keeping for your tax professional.

Jean C. Gordon said...

Wishing you the success that will make tax concerns possible.

Jean C. Gordon said...

I'm not so much an English guru. I love my editors. I don't claim the office deduction, either, because my area is part of a room and I feel that can get sticky, despite the regulations saying it's okay.

Jean C. Gordon said...

Nice to see everyone up and here so early.

cathyann40 said...

I have taxes on the brain. The ake is yummy

Rose said...

Great information, Jean. I do many of things on your list now, but am going to print this out to make sure I'm not missing a deduction.

Suzanne Baginskie said...

Jean: I am amazed by the professionalism of your tax column. This subject is something writers stumble into after they start selling their books. The IRS needs to know if you are a hobby or a business? If it's a business you need to keep track of everything. Your article outlines the facts clearly. In the past I have used Turbo Tax Deluxe and they have a section for artists and writers to guide you with entering expenses, etc. but you have to maintain your own records to do that. I find your bio so interesting. Sounds like a lovely life. Bless you and thanks for sharing.

Suzanne Baginskie said...

Happy Birthday to Seekerville on the 14th day of October. Is everyone ready for the weekend? It's coming fast. Today I have French vanilla coffee and dreaming of those old fashion, powered sugar crum buns we use to have on Sunday after church. Give me one and the comics to read and I'm back in my childhood. Sigh.

Caryl Kane said...

JEAN, welcome to Seekerville! Thank you for the informative post.


Jean C. Gordon said...

Suzanne -- It's second nature to me. It's what I did professionally for more than 30 years. Yes, I was ten when I started.

Jan Drexler said...

Hi Jean!

Thank you for the information - and presented in a way I can understand without my eyes glazing over!

Your explanation of the self-employment tax is especially helpful. I hadn't even thought of it until it came up in a Facebook conversation a couple months ago. You've given me a place to start. :)

Have a great day!

Tracey Hagwood said...

Hi Jean! I almost didn't stop for this tax post as I'm not a writer, but when I say the title of your tax presentation, "Romancing the IRS", I couldn't stop laughing, so I continued on. You are a clever romance writing financial planner!

My husband has been self-employed for years so much of what you've shared is familiar to me. The first few years he had his taxes done by someone else, but over time he got comfortable with it and starts doing his own. The main thing we have learned is to pay close attention to any new laws/regulations that may change each year.

Your book sounds great, I like when writers come up with interesting and unique plots, that's not easy to do.

I'm enjoying the coffee, but I think I'm in the mood for a cinnamon roll, so I ordered several dozen for us, enjoy!

Jill Kemerer said...

Thanks for all the great onfo here, Jean! Bookmarking this one!

Megan Brummer said...

Oh boy. My head is spinning! Would you believe that until today I had never thought about having to pay taxes on writing income! Definitely bookmarking this post for later when that becomes my reality :)

And thanks for the coffee and angel food cake Ruthy! A little caffeine therapy helps while thinking about taxes. Ha!

Rachel Stark said...

Great post!! And that banana split cake sounds delish!! :D

Connie said...

Amgel Food cake is a favorite and these tax tips are great for many professions. We were farmers for many years and accurate records and tax planning were very important!

Audra Harders said...

Jean, welcome to Seekerville! I love how you've given us a check list of taxable/deductable items. Lists I deal with when it comes to cross checking income, LOL.

Our accountant for my husband's company has a great sense of humor when it comes to estimating my author taxes. She never allowed me to claim deductions before I was published. She'd give me that look and ask, "so what income am I supposed to claim this against?" Instead, she kept Schedule C's on file and when I finally claimed an income, she deducted accordingly with a hint of a smile on her face.

Oh, yeah, and she celebrated with me. Probably a strange thing to say, but I love our tax accountant, LOL!

I absolutely love you "number" guys. You help keep my eyes from crossing when April 15 rolls around.

Thanks, Jean!!!!

Barbara Scott said...

Ooooo...I'll take one of your cinnamon rolls, Tracey. Yum!

Jean, I'm saving your tax post and sending it to my tax guy! And keeping a copy for me. I used to cry and shake a lot just sorting through my receipts, let alone doing my taxes. I am NOT a math person. My tax guy is retired now, but he still does our taxes. Please, Lord, let him live to be 120.

I found a new deduction in your post...I think: my dental insurance. Can I list that expense on my Schedule C?

Thanks, Jean!

Mary Connealy said...

Marianne there are ways to make money writing that are NOT book length fiction.
Do you live in a small town? Small town newspapers are ALWAYS looking for content. You could get a job, maybe not even charge, to write a column for the newspaper. I wrote book reviews for my local paper for years. Does your church have a newsletter? Volunteer for that. Yes these are volunteer but writing can lead to writing. Pitch snort fiction to magazines, or short non-fiction. See if your school needs someone to write their school newsletter or update their website. For some small money. Find short form. Find non-fiction. I have a friend who loves to quilt she got a job in a small regional quilting magazine, pays just a little and she's got all these writer's credits. Find ways to bring in smaller amounts of money as writing income by using hobbies or just anything you enjoy. Being a grandma. Cooking. Bike riding. It doesn't have to be an intensive interest, just something you love. Then writing about that and earning a little makes your writing NOT a hobby. Plus you might make contacts that will surprise you.

Jean C. Gordon said...

Thanks for the cinnamon roll.

Myra Johnson said...

Thank you for this comprehensive look at taxes and the writer, Jean. It's great to have you as our guest today!

For many years now, Project Guy and I have been fortunate to have a CPA who takes extremely good care of us at tax time. I can't even imagine trying to keep up with all the nuances of tax law. I've learned enough over the years to keep detailed accounting records in Quicken so that all I have to do at tax time is print out my reports. I supply the numbers to our CPA and he figures out what to do with them.

Myra Johnson said...

Oh, I know what you mean, Barbara! I'm praying our tax guy NEVER retires (at least not before I do)!

Jean C. Gordon said...

One of my best friends was a tax accountant before she was my editor-in-chief at my former tax and financial writing job.

Jean C. Gordon said...

Yes, Barbara, you should be able to if its private insurance, not through another empoyer.

Janet Dean said...

JEAN, welcome to Seekerville. We're delighted to have you and your expertise with us today! I'm going to show this to my DH. He's the one that handles our taxes. Numbers aren't my thing. Romancing the IRS made me smile.

Congrats on your novels! Mending the Motorcross Champion sounds terrific!


Rachael Koppendrayer said...


While writing qualifies as a hobby for me, I do do sewing and art as a business, and it's nice to have someone spell things out in a way I can understand (namely, written in layman's English). And extra thanks for the reminder about claiming a room as part of a business--since we have just moved out of a 1-bedroom apartment into a 3-bed, I actually have a separate room now exclusively for my work!

Jan Drexler said...

Thanks for asking this, Barbara! I pay for my own dental and health insurance rather than getting through my husband's employer. So this is something I can deduct? I'll have to look into it...

Missy Tippens said...

Jean, welcome! Thank you for this great summary of taxes for writers!

One thing that jumped out at me, and I want to clarify. When I've gone to conferences and taken my husband/family, I've usually only deducted half of the hotel room cost. Can I actually deduct the full room cost?


Jean C. Gordon said...

You should be able to. You would have had to pay the full cost of the room whether the family members came or not.

Jean C. Gordon said...
This comment has been removed by the author.
Fedora said...

Ruth, cake is not a skill to be overlooked or taken too lightly! :) Mmm...

Vince said...

Hi Jean:

Happy to see your motocross book, "Mending the Motocross Champion" is out! I already have a copy on my Kindle. My brother raced motocross professionally and I would sometimes ride along with him on practice runs in the desert. I wasn't up to the jumps he did but it was crazy fun anyway. Can't wait to start reading. Here's wishing you the best of success!


Missy Tippens said...

Good point, Jean. Thanks!

Deanna Stevens said...

Aw, taxes.. I finally gave up my quilting business when as you say.. it showed more as a hobby.. Great information Jean. I personally had the experience of mending a Motocross rider.. wishing you much success!

Julie Lessman said...

JEAN!!! Soooooo great to see you here, my friend, even if it IS talking taxes ...

((((( COLD CHILLS!!!!))))))))

Like every other author, I have a bad day every now and then, but I have FOUR totally debilitating days every year, and those are when I do my quarterly expenses/profits for my tax person. My poor hubby hightails it out of the house if he can and if he can't, he's walking on eggshells because I HATE figuring my quarterly figures!!! I know I'm doing something wrong because it generally takes me most of the day. Sigh. But thank God we have a tax person who handles the tax portion of it because like Barb, I am AWFUL at math (just ask Tina!).

I am SO impressed with everything you know and even a little impressed that I knew some of what you said, but you did save me on book expenses. I generally deduct all books I read in my genre because I consider them part of keeping up with my business, but it sounds like you are saying only research-related books can be deducted, right? I don't actually buy a ton of books other than the 99-cent Kindle deals, so it's really not that much, but I guess I'm going to have to cut them out?


Julie Lessman said...

MARIANNE SAID: "Any ideas of how I can turn my hobby of reading into a business?"

LOL ... if you find out, girl, let me know because I read about 6-8 books a month, so a paycheck for that would be nice ... ;)


Heidi Robbins said...

Thanks for this informative post! I'm sure it will be helpful to so many!

Beth said...

Wonderful post, Jean. I've been wondering about deducting books. I've been deducting craft (how-to) writing books, and I know if I wrote books about doctors in a hospital I could deduct a medical referece book, but I've wondered I can deduct the cost of books from the same line I write for. Is it research? Or if I enjoy them, does that mean they're not work?

Jean C. Gordon said...

Thanks, Vince.

Sandra Leesmith said...

Hi Jean and welcome to Seekerville. What an informative and thorough list of items we can deduct for taxes. This list is great in keeping us conscious of what we should be keeping track of as we write so as to treat it like a business.
You are so correct in your items to deduct with IRS. I've been deducting my writing as a business for years. And I've been audited too. The IRS auditors are wonderful. They showed me even more ways to deduct and were very impressed because I had everything documented. (They taught me how to do that too.) If you do get audited and aren't published yet, take your rejection letters. They show you are pursuing writing as a business, not a hobby. If published take them copies of our books. That proves you are writing for real. smile

Thanks again for coming. Have fun today.
Tell Ruthy thanks for the cakes. They will hit the spot for an afternoon treat.

Jean C. Gordon said...

Julie -- to clarify research. It's reasonable to research a publisher you want to write for by reading books it publishes. It is also reasonable to read popular books in your genre or a genre you want to write to keep up with trends in your business.

Jean C. Gordon said...

Yes, Beth, it could be reasonable to claim the cost of buying books in the line you write for as a research expense.

Jean C. Gordon said...

Sandra -- good advice on rejection letters as proof of your business focus.

Nicky Chapelway said...

Wow, YIKES! This is giving me bad flashbacks of my Record Keeping days.

Taxes? Eww... is this what I have to look forward to when I become an adult?

(full body shudder)

Thank goodness that at the present moment my writing is nothing more than a hobby, because this is all just too complicated for my little head.

Barbara Scott said...

Myra, we're on the same

JEAN, that's great news! I have a Medicare Advantage plan for health, but I pay for private dental insurance. I assume I can't put my health insurance with Blue Cross on my Schedule C though, or can I? Even though I receive Social Security, the cost of my insurance is held out of my check each month. It's soooo confusing.

Thanks again for the tax tips!

Ruth Logan Herne said...

I was tied up with kids and pumpkins today, but Jean... YOU ARE AMAZING!!!! You've waltzed right in and done a wonderful, wonderful job.

I am so happy right now. :)

Barbara Scott said...

Great question, JULIE! I've always deducted the cost of fiction I buy because I edit, write, and acquire in both contemporary and historical fiction. It sounds like I'm good.

Barbara Scott said...

Great question, JULIE! I've always deducted the cost of fiction I buy because I edit, write, and acquire in both contemporary and historical fiction. It sounds like I'm good.

CatMom said...

Thank you for sharing your wisdom and expertise with us, Jean - - Wow! You are very smart! My Daddy was a long-time IRS employee, but I always laughed and said I basically knew *nothing* about taxes (although I've paid plenty, and always on time, I'm happy to say, LOL). :)
I also wanted to tell you again how nice it was meeting and talking with you at the Love Inspired Open House in Nashville in August! :) You were so kind and easy to talk with - - it really was a pleasure visiting with you.
Thanks again for sharing this helpful info. today.
Blessings, Patti Jo

Myra Johnson said...

Something else I have done consistently since beginning to pursue writing as a business is to keep a time log. Mine is an Excel spreadsheet that includes the date, the title of whatever book project I worked on, brief notes about any other writing-related activity I spent time on, the start/stop time of my workday, and the total hours worked that day. The spreadsheet also keeps a running total for the daily hours worked from January 1 through December 31 each year. So if I'm ever audited, I have something that shows I have been working consistently at this career.

Jean C. Gordon said...

Anything to make you happy, Ruthie. I was looking forward to this. Every so often, I miss my old day job.

Jean C. Gordon said...

Good to "see" you again, and good luck with your LI submission.

Jean C. Gordon said...

That's a great idea, Myra, and not just because you use my favorite game, I mean business tool, Excel

Dana R. Lynn said...

Hi Jean! If there was one aspect of being an author that might scare me enough to think for a moment about quitting, it's this. Because it all seems so complicated, and I am NOT a math person. Thanks for pulling me back down from the panic I felt when I saw today's topic. You're information is so helpful. This post is not only bookmarked, but printed, as well.

Boo Smelser said...

Wow, I can tell you put a lot of work into this post. I'l have to remember to look back at it when the time comes that I need it.

Phyllis Wheeler said...

Well done, Jean!

May God bless you and all of Seekerville!

Tina Radcliffe said...

Myra, that is something I have been wanting to do. Clock in and out, like the day job. I got an app for that even.

Tina Radcliffe said...

I always deduct for fiction and non-fiction because my reading is for my writing. I deduct DVDs that I am using for research too. Like The Last American Cowboy.

Jana Denardo said...

Thanks so much for this. It'll be very helpful.

Laura Conner Kestner said...

Wow, JEAN, this was so interesting and easy to understand, and I really didn't think it would be. I haven't sold a book yet, but I'm keeping this where I can find it for when I do. Thank you so much!!

Chill N said...

Oh, Jean, where were you years ago when I became self-employed? :-D Seriously, thank you for sharing your knowledge. Best wishes with your writing!

Nancy C

Terri said...

Hi Jean, thanks for the tax information. I'm always worried about what to deduct so I found this very helpful.

Your new book sounds great!

Edwina said...


My little gray cells are blown away! Thanks for the tax information and the way you presented the info. Easy to understand!


Jean C. Gordon said...
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