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Hey there, fellow wordsmith! If you’re a published author—or planning to become one—there’s one not-so-glamorous thing you can’t ignore: taxes. Yup, when you dive into the world of book publishing, you’re not just a writer anymore… you’re a small business owner.
Whether you’re navigating the indie route or working with traditional publishers, managing taxes can be just as important as crafting your story. So, let’s walk through five essential tax tips that every author should know—and how they can save you time, stress, and money.
Why Authors Need to Think About Taxes
The Business Side of Writing
You may write for passion, but once your words start making money—whether from book sales, royalties, or freelance gigs—Uncle Sam wants a piece of the pie. That’s when you move from hobbyist to business owner.
Hobby vs. Business: The IRS Difference
Here’s the kicker: if the IRS thinks your writing is just a hobby, you can’t deduct expenses. But if it’s a business? Welcome to the world of deductions, write-offs, and self-employment tax. If you intend to make a profit, you’re a business in their eyes.
✅ For more on transitioning from hobbyist to pro, check out Author Career Guidance.
Tip #1: Keep Track of All Your Expenses
What Counts as a Business Expense?
Think beyond the basics. Here’s a non-exhaustive list of deductible expenses for authors:
- Laptop, software, and writing tools
- Website hosting, domain fees
- Cover design, editing, formatting
- Marketing and advertising
- Writing courses and workshops
- ISBNs, printing, mailing ARCs
- Travel to book events or signings
Basically, if it helps you write or sell your books, it could be deductible.
How to Log Your Expenses Effectively
Use apps like QuickBooks Self-Employed or Wave Accounting. Better yet, open a separate bank account just for your writing income and expenses. That way, everything stays clean and clear.
Want tools that make author life easier? Here’s a roundup of helpful Author Tools.
Tip #2: Understand Self-Employment Tax
What Is Self-Employment Tax?
If you earn more than $400 in net self-employed income in a year (even from royalties!), you’re required to pay self-employment tax—currently about 15.3%. This covers Social Security and Medicare.
How Much Should You Set Aside?
A good rule of thumb? Set aside 25-30% of all writing income. It sounds steep, but you’ll thank yourself during tax season.
Curious how indie authors manage finances? Our resource on Self-Publishing goes deep into the behind-the-scenes business setup.
Tip #3: Don’t Miss Out on Author Deductions
Common Author Deductions You Can Claim
We touched on this earlier, but let’s expand:
- Home office (if used exclusively for writing)
- Internet and phone usage (percentage)
- Professional development (books, courses)
- Subscriptions to writing platforms or communities
How to Maximize Your Deductions
Keep detailed receipts and documentation. Snap pics, save invoices, and label everything. When in doubt, track it. If the IRS comes knocking, you’ll be glad you did.
Looking to improve your craft and claim it on your taxes? Browse Writing Process Resources and Author Education Courses.
Tip #4: Pay Estimated Quarterly Taxes
Who Needs to Pay Estimated Taxes?
If you expect to owe at least $1,000 in taxes for the year and you’re not having taxes withheld from a paycheck (like a regular 9-to-5), you need to make quarterly payments.
How to Calculate and Pay Quarterly Taxes
Use IRS Form 1040-ES or online tools like TaxAct or TurboTax. Set calendar reminders for:
- April 15
- June 15
- September 15
- January 15 (of the following year)
This keeps you from facing underpayment penalties.
Check out our Learn to Publish guide for more financial best practices.
Tip #5: Work With a Tax Professional Who Knows Publishing
Why a Tax Pro Can Save You Big Money
Not all accountants understand the nuances of being an author. Find someone familiar with creative businesses—especially publishing.
They can help you:
- Avoid red flags
- Structure your business entity
- Maximize deductions
- Stay compliant with IRS rules
Questions to Ask Your Accountant
- Do you have experience with authors or creative freelancers?
- What records should I keep?
- Should I form an LLC or stay a sole proprietor?
- How do I handle multi-stream income (royalties, coaching, speaking)?
Want to explore different publishing paths? Compare Traditional Publishing and self-publishing to see what suits your goals best.
Bonus Tips for Indie and Traditionally Published Authors
Self-Publishing Tax Tips
Self-published authors wear ALL the hats—writer, editor, marketer, CFO. That means you’ve got more write-offs (yay!) but also more paperwork.
You’ll need:
- EIN (Employer Identification Number)
- Schedule C for business income
- Form 1099s if you hire freelancers
Dive deeper into indie author financials with our Independent Author Guide.
Traditional Publishing Tax Considerations
If you work with a publisher, you’ll likely get Form 1099s for your royalties. You may also receive advances—which are taxable the year you get them, not when the book is published.
Brush up on your publisher tax knowledge at Book Publishers Insight.
Tools and Resources to Simplify Author Taxes
Tax Software and Apps You’ll Love
- QuickBooks Self-Employed
- FreshBooks
- TurboTax Self-Employed
- Expensify
These make tracking expenses and income much less painful.
Courses and Communities for Author Education
Never go it alone. Check out:
Stay connected with other authors and learn together!
Final Thoughts: Writing Words and Counting Dollars
Being an author isn’t just about writing books—it’s about building a business. And like any business, you’ve got to keep your finances in check. Start simple: track your income, save your receipts, and stay on top of deadlines.
The better you manage your taxes, the more freedom you’ll have to keep writing the stories that matter.
For even more support on your author journey, check out the main hub at IntuitsBook.com.
FAQs
1. Do I need to report book income if I only made a few hundred dollars?
Yes. Any income, even if it’s $100, should be reported. If it’s over $400 net, you’re liable for self-employment tax too.
2. Can I deduct my home office as a writer?
Yes, if it’s a dedicated space used solely for writing and business activities. Partial-use spaces don’t qualify.
3. Do I need an LLC to deduct expenses as an author?
Nope. Sole proprietors can deduct business expenses. An LLC offers legal protection, but it’s not required for deductions.
4. What if I co-author a book? How do taxes work?
Each author reports their share of the income and expenses. Consider a legal agreement outlining the split.
5. Should I hire an accountant or use tax software?
If your income is simple, tax software may be enough. If you have multiple income streams, an accountant who knows publishing is worth it.
6. Are writing workshops and retreats tax deductible?
Absolutely—if they’re related to your author career. Keep receipts and documentation showing the professional purpose.
7. What’s the biggest tax mistake authors make?
Not setting aside money for taxes throughout the year. It can lead to stress and penalties when filing.