Alright, so I’ve covered the basics of taxes and what deductibles are. I’m going to expand a little more on all this and delve into the subject of self-publishing and taxes. These are just some tips to help make your life easier during tax season and to earn back as much you can.
So the first thing you should know, and you should’ve deduced from my previous posts, is that you need to treat your writing as a business and not a hobby.
What does owning a business mean? Well it means a lot of things: owning a website, advertising, and even filing under a business name.
Here are some things you’ll need as a self-published author:
- A company name (this is for filing purposes)
- EIN (Employer Identification Number), which is obtainable on the IRS website
- A resale certificate*
- A local business license**
→Did you know? The EIN is for tax administration only. It isn’t used in other services, such as lotteries. For more information on EINs, click the IRS link above.
*This may be called a seller’s permit. States without sales tax may not require this. File it under your “business” name and use your EIN.
**Check with your local city government to see if you’re required to have this.
When filing taxes, you’ll want to follow the same rule of thumb as any other author. Keep all of your finances separate, log and track everything from mileage to receipts.
Did you publish through a third-party, such as Amazon’s Kindle Direct Publishing? Amazon has a process it goes through in order to make sure you get all the tax information you need to file!
Most of the steps are similar. You do require a TIN (which can be represented by your EIN).
→Did you know? Amazon goes through a process of tax interviewing when you start publishing on their site. This is accessible through your KDP account. It’s only to understand your tax status and is basic tax questions. Make sure you have all your paperwork with you when you answer these questions. After the interview, you’ll get a tax ID. It can take up to 60 days. Once your account status is complete, you can start selling.
Amazon will send you a 1099-MISC with all your royalty information and this is what you’ll use for your taxes. These should have been issued out no later than January 31st.
→Did you know? Amazon can withhold taxes, but it varies across the board. You can review this is your KDP account page.
For the most part, taxes are all the same when it comes to writers. The deduction process is going to be the same and you’ll still need a 1099-MISC. You won’t have a publishing house, though, to keep track of all your finances, so it’s important that as a self-published author, you keep accurate, detailed records.