How to File Income Taxes if You're a Professional Writer and Hobbyist

Filing taxes as a writer can be confusing. There are different ways to file taxes depending on how you treat the income from writing. Are you a professional writer or are you a hobbyist? It makes a big difference on your tax forms. Let's take a look.

All writing income needs to be reported to the IRS regardless of whether you are a professional writer or a hobbyist. If you have made at least $600 from any one company, then they will send you out a 1099 form, but if they did not send you one, you are still responsible for reporting any money earned. It does not matter if your income came from an overseas contractor or one here in the United States. Sometimes it is better to file taxes as a hobbyist rather than a professional who writes for a profitable business. See the IRS secrets below.

Here are the steps to file taxes and determine which Schedule to fill out:

Prepare to File Taxes

Take your form 1099 from Associated Content and other places that have sent you a 1099 form and add the totals up. This total from all 1099 forms go into form 1040 (Other Income), but not before the necessary deductions from Schedule A or Schedule C.

The professional writer can deduct all reasonable and ordinary business expenses incurred during the year, even if the total expenses are a loss. However, a person that writes for a hobby can only deduct up to the amount of money made.

Taxes for the Hobbyist

To begin, the hobbyist needs to fill out Schedule A. Remember, any loss from the hobby still results in paying taxes because a hobbyist can only deduct up to the amount of income they received. Any income, after deductions, is subject to tax.

The best-case scenario for the hobby writer is to use Schedule A where the income and deductions are a breakeven amount; there is no profit, no loss. There are no taxes due if income doesn't exceed deductions.

Taxes for the Professional Writer

The professional writer uses Schedule C where this assures that all deductions and expenses will reduce the writing income, and this total after deductions, moves over to form 1040.

If this is the first year you have earned income as a professional writer, you can deduct equipment that was bought in previous years, as long as those items were needed to launch a profitable long-term business.

Don't forget, if an editor accepts a piece of work in the current tax year, and that money hasn't been received, then you don't have to pay tax on that income yet. Pending money doesn't count.

IRS Secrets on Taxes

If you consider yourself a professional writer, using Schedule C for the last three years, and do not generate a profit, then the IRS may do an audit and you may be held responsible for back taxes. This is because they will see your income as a hobby rather than a profitable business.

You can fight this. It is important to have either digital or written proof of your work submissions. This will help prove to the IRS that you are writing for a living rather than a hobby. Consider using Excel or submission tracking software like Power Tracker, Write That Down, or The Working Writer.

If you do get an audit, don't' worry so much about it. A law school graduate who worked with the IRS says that as long as you work with the IRS, there is no reason to fear. They only want cooperation and the money that that is due.