Tax and Other Information for Self-Employed Writers

Did you earn more than $600 writing online this year? Then you may have to provide that information to the IRS on your taxes this year. If you made less than that from one, but had earnings from several publishers and expenses and/or other deductions, you may want to file a tax return for your self-employed earnings as a nonprofessional writer.

The best place to start is with a tax professional who is up-to-date on the latest IRS tax information. It is well worth your time and money to invest in a professional accountant or tax advisor because they hopefully will stand behind you, your income tax statement and any refund requests that you file. The following information is simply basic forms and knowledge to get you started and to plan ahead.

First, it is always helpful to follow your earnings statements online from the publishers that you write for and they should send you a tax statement if your earnings exceed $600 in one year. Make sure that your name, address and social security numbers are up-to-date. Make a note of the online publisher's website which provides financial information, their physical address and phone number, as well as any payment information. If you are self-employed with no employees your personal social security number can act as your sole proprietorship business tax ID number.

Using monikers and/or pseudonyms to hide your identity when you write may provide you with a sense of security and privacy, but it becomes much more difficult to identify your work and who created it, who earned it and to claim copyright of your materials and/or claim earnings for your work on your taxes. It is best to keep the names simple and singular. The Library of Congress offers free advice online regarding registering your work and there are special categories for books, online websites, visual, audio and serial works of art. If you sell your work outright to the publisher, they may choose to continue to publish your work indefinitely. Many are now starting performance bonus royalty programs that continue to earn you money continuously so long as the piece is still being read and enjoyed.

The forms you will need are the 1040A (EZ will not work) and Schedule SE (Self Employment Tax) and EIC (Earned Income Credit without child or with child if that applies). Note retirees: EICs are for those whose earnings, without children, were less than $12,590 as a single person. You will need the general instruction booklet which contains the "Principal Business or Professional Activity Codes" at page C-8 through C-10, to enter on the SE form. I believe No. 711510 is the code for independent writers, artists and performers.

If you are a nonprofit, working for a nonprofit , charitable or religious organization, there are special tax credits and deductions for these, so check with your tax advisor. Sometimes you are offered compensation, room and board or other earnings in lieu of pay and the IRS may want to know about these kinds of earnings as well as travel expenses, honorariums, costs of publishing and so forth.

You will be able to deduct for expenses, if you provide the additional form for business expenses, which could include everything from paper and pens to computer equipment, but be sure you have all your receipts to back up what you are claiming and that these were related to your home business. Your office should be a separate space and be solely used for that business.

Royalties can continue even after your death, so be sure that your estate planning and will continue a provision for those who may benefit from your royalties. You cannot count on future income, but it is nice if you have made a provision for where that income may go if you are not around to collect the payments. Make sure your family members know how to access the websites where you publish and how to retrieve your earnings in the event you are unable to do so from illness.

A good legal resource for self-employed writers are Artist Trusts (Seattle) and other writer organizations which cater to independent artists. These types of organizations with a small membership fee will provide invaluable information regarding grants, scholarships, venues, financial, legal and tax advice. You may want to also join in any online chatrooms and communities which cater to people who write nonprofessionally.