Writers excel at storytelling, but you can't take creative liberty when it comes to taxes. As a self-employed writer, you need to file both state and federal taxes, as well as 1099 forms.
Generally, independent writers have to file a “Schedule C” as part of their regular 1040 income tax form, which is where they report their art income and expenses. They may file a form 8829 for the home office (studio) deduction which will also require them to pay self-employment tax (Schedule SE) on their net income, as well as federal income tax. All these forms are part of the 1040 income tax filing.
Taxes can get burdensome, and freelancers often overpay their taxes. However, there are several freelance writer tax deductions available for self-published authors.
As a writer, you can save thousands of dollars at tax time by deducting business expenses. That’s because every time you write off an expense, you lower your taxable income – putting the money you spend on your business back in your pocket.
Some of the business expenses you can deduct include travel, meals, inventory, vehicle and transportation costs, equipment, writing tools, home studio expenses, legal and professional fees, health insurance, and more.
As a self-employed writer, you are required to file your self-employment taxes. However, if you work for someone else, your employer pays half of your Social Security and Medicare taxes. According to the U.S. tax code, all companies must provide workers who earn over $600 through their organization with a 1099-MISC form at the end of the calendar year.
If a majority of your income comes from publishing books with a single publisher, you might not have numerous 1099-NEC forms to keep track of, but you should still receive one from the company you published with. This income goes on Schedule C as well.
If you have a regular job, you’ll only have to pay SE tax on the portion of the income you included on Schedule C. If you had more expenses than income from the publication of your book, this is a business loss. It can reduce the amount of income you have to pay taxes on, even if you earned that income from an employer.
As a freelance writer, you can deduct all your business-related trips. The IRS does not consider commuting as a business mileage expense, so driving from your home to your workplace does not count. However, running a business errand for the following reasons is considered a valid expense:
You can also deduct your car expenses using the actual expenses method, wherein, you can itemize your vehicle expenses like gas, oil changes, car repairs, and car insurance.
As a writer, if your home serves as a designated workspace used solely and regularly for your business (writing). Generally, the IRS offers you two ways to claim the home office deduction:
Moreover, if you are eligible for the home office deduction, you can also deduct some home-related expenses such as mortgage interest, insurance, utilities, repairs, depreciation for that area, etc. It is one of the most valuable freelance tax deductions available.
As a writer, you can deduct every single magazine that you subscribe to, this includes magazines, journals, newsletters, and other subscriptions that are useful for your writing business (e.g. a magazine to which you want to sell a freelance article) is deductible.
You can deduct these expenses for the purpose of learning about language or sentence structure. Aside from the publications, you can deduct the cost of subscriptions to streaming services like Netflix, Hulu, and Amazon Prime.
Subscription to these streaming services can serve as research material especially if you write fiction and wish to learn about dialogue, scenes, about editing.
However, in order to claim the deduction, it must be used solely for business purposes. If your friends use your Netflix subscription, then you might only be able to deduct a portion of the Netflix fee, since technically others are using the service too, and those are non-deductible expenses.
Any office supplies such as a computer, writing tablet, printer, and stationery items you use to run your business are deductible.
Freelancers can deduct office supplies so long as they are “ordinary and necessary” (which is the IRS’s rule of thumb for all deductions). Be sure to save all of your receipts so that you can file your taxes properly at the end of the year.
If you travel to meet with clients, remember that business-related travel expenses are deductible. You can write off airfare, hotel costs, rental cars, allowable mileage amounts on your own vehicle, and meals (half their value).
The cost of traveling for an author tour is also deductible. If you stay on location for a few days after the conference or meeting for a vacation, though, you can’t deduct that—only the portion of the trip that was directly business-related is allowed.
If you spend any kind of money looking for freelance writing jobs, or for an agent, or for an editor, you can deduct that.
Any meals you consume while attending a conference or a meeting with a client are deductible. To be a legitimate business expense, the meal has to be for work purposes, as always—it can be dinner alone when you’re at a conference or treating a writing client or an interview subject to lunch, but it has to be completely work-related.
Internet is a necessity, not just for writers but every other individual so if you are self-employed you can deduct your internet and telephone expenses. If you also use your phone for personal reasons, you can only deduct the portion used for business. The same is the case with your wifi bill.
Any advertising expenses used for promoting your business such as online ads, signs, print ads, videos, website hosting fees, and more are deductible. Similarly, the following marketing expenses are also deductible:
Any furniture you buy for your offices such as an office chair, desk, and lamp, is deductible. This also includes any decor you buy for your office.
Any bank fees charged for a check or for taking money out of an ATM can be deducted from your taxes.
Any wages you pay for promotional purposes are deductible. So, if you pay a publicist, or ISBN, or someone to build you an author website, it’s all deductible.
Any legal fees you pay to your lawyer to help you deal with a complicated publishing contract are deductible. Similarly, any fee you pay to your accountant to deal with your taxes is also deductible.
If you use any software or writing tools such as Grammarly, or Office 365 for writing purposes is deductible.
Keeping yourself up-to-date on the current state of your industry requires continuing education, and these expenses can be deducted. Conferences, courses, books, and seminars all qualify, as long as they specifically serve business purposes.
Certain educational or certification expenses can also be deducted so long as they are directly related to your current line of work and not a new career. Keep track of your tuition and other education expenses throughout the year to claim this freelance writer tax deduction.
Taxes can be a hassle so to ensure that your taxes don’t cause you any unnecessary trouble, here are some tax tips:
If you are an author, then the royalties from copyrights and publishing are taxable as ordinary income.
In most cases, you must report royalties in Part I of Schedule E (Form 1040). You can add your royalty payments in the Rental Properties and Royalties section.
Most writers earn very little money for several years before finally getting regular income from books, speaking engagements, and freelance opportunities. Still, the IRS wants to see income and profit within about three years of taking deductions, or else they start to get suspicious.
Here, FlyFin can help you perform the calculations and pay the right amount of taxes.
It is powered by A.I. that scans your expenses and automatically finds deductions. When it comes to any sort of complicated deductions such as the home office, the app allows you to consult an expert team of CPAs to help you determine if you qualify for further freelance writer tax deductions.
Along with that, FlyFin provides an accurate Self-employed Quarterly Tax Calculator for freelancers to calculate their quarterly taxes and ensure they file more efficiently to save time and money.
FlyFin CPA Team
With a combined 150 years of experience, FlyFin's CPA tax team includes tax CPAs, IRS Enrolled Agents and other tax professionals, offering users the most comprehensive tax advice and preparation.