Dramaquill's All Things Writing

March 6, 2009

TAX TIME – don’t forget your writing income

Arts Blogs - Blog Top Sites

With income tax returns due in North America in the month of April, March is a good time to go over your writing records and see if you have income to claim.

If you freelance full time, then your writing is a business and you claim all income and expenses from it.  But did you know that even if you only earn a small amount from your writing, you must not only claim that income in your tax return but that you can also claim a portion of many of your household expenses?

Many writers, probably the vast majority, write around their actual full-time job.  Or perhaps you’re a stay-at-home parent who writes to supplement your household’s income.

You definitely need to keep records of all “writing related” income and expenses.  And remember, the simpler, the better.

I keep two  files:

INCOME (cheque stubs, paid invoices,deposit slips and any other record of monies I’ve received from writing)

EXPENSES (paper, printer ink, long distance phone calls, postage and mailing supplies, computer/internet costs, and even mileage)

Whenever I receive a cheque from having sold a piece of writing, I tear off the bottom portion, write what the money was from, and pop it into my INCOME file.  After I deposit the cheque, I staple the deposit slip to my cheque stub as a confirmation.  If I’ve done a freelance job that requires invoicing my client, then I staple the payment info. to the invoice.

Expenses are harder to calculate because if you don’t work full-time as a writer, then you can only claim a portion of the items mentioned above.  For example, if you are using your home computer, you can’t claim all of the paper, ink, internet fees etc. because you are only using the computer part of the time for your writing.  Figure out what percentage of your time is actual “working writing” time.  Knowing an accountant or bookkeeper is an asset as they can help you calculate these expense percentages.

All postal expenses you incur for mailing out queries, manuscripts, returning contracts, etc. can be claimed.

Keep a log book in your vehicle.  If you are driving to go interview someone for an article, you can claim that portion of your vehicle expenses. 

I’m not an accountant, nor am I an expert in this field so before you claim any expense related to writing, check with your internal revenue department to make sure that it’s an allowable expense, or better yet, have an accountant do your taxes for you.

Above all, keep impeccable records so that you can defend any inquiries regarding your freelance income or expenses.

Now I’m off to get out my files and take stock of my 2008 writing income and expenses.

Create a free website or blog at WordPress.com.