Tax Time: Is Your Writing Career a Business?

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Q: I made some money last year through my writing. As tax time rolls around, I'm wondering: How much money do I have to earn before I have to declare myself as a business? –Alice H.

A: There is no set dollar amount that mandates you to declare your writing income as a business. In fact, you can consider it a hobby if you like. But all income earned from your writing (no matter how you classify it—business, hobby, grown from magical tree) is taxable and must be reported to the IRS.

The decision to declare your writing career/income as a business is really up to you. There are advantages to this, like tax deductions for your writing space, office equipment, phone charges, website charges, etc., and it's a good way to track your earnings and expenses year after year. Plus, it's emotionally gratifying to elevate yourself from enthusiast to professional writer. And you can print business cards to prove it (which, by the way, is also tax deductible).

Of course, if you make little or no money from writing, it's generally better to classify it as a hobby. You get fewer deductions, but then you don't have to waste too much time or energy filling out a Schedule C or the 1040 long form (both of which are required for business income).

If tax time rolls and you're still unsure where you fall on the line, consider this: If you're actively profiting (or trying to profit) from your writing, you're a business. If you're not concerned with profits and are in it for the love of writing, you're writing as a hobby. Either way, it's probably wise to consult an accountant.

Brian A. Klems is the online managing editor of Writer’s Digest magazine.

Have a question for me? Feel free to post it in the comments section below or e-mail me at WritersDig@fwpubs.com with “Q&Q” in the subject line. Come back each Tuesday as I try to give you more insight into the writing life.