There are many deductions writers can take to reduce their taxable income for the year, and thereby reduce their taxes.
Are you a professional writer? That is, is your writing activity a business? If so, there are many deductions you can take to reduce your taxable income for the year, and thereby reduce your taxes. These deductions are quite valuable--for example, if you're in the 22% tax bracket, each $100 in deductions saves you $22 in income tax. It will also usually save you about $15 in self-employment taxes as well.
Common deductions taken by writers include:
Office Expenses: If, like most writers, you work at home, you may be able to deduct the cost of your home office. This deduction is particularly valuable if you are a renter because it enables you to deduct a portion of your monthly rent, a sizable expense that is ordinarily not deductible. If you rent an outside office, the entire cost is deductible.
Long-Term Property: You may deduct the cost of long-term property you buy for your writing business that will last more than one year, such as a computer, cell phone, and office furniture. Such property can usually be deducted in a single year using 100% bonus depreciation (in effect through 2022), Section 179 expensing, or the de minimis safe harbor (applicable to property that costs $2,500 or less). This enables you to get a big deduction in a single year rather than spreading it out over several years.
Supplies: Supplies are business items that you use up in less than one year. They include everything from paperclips to postage stamps. They can all be deducted the year you buy them.
Subscriptions: You can deduct the cost of subscribing to on-line and print publications useful for your writing business. These include magazines, journals, newsletters, and blogs. This would also include, for example, the cost of any magazine to which you may wish to sell a freelance article.
Research Expenses: Professional writers may deduct their research expenses such as the cost of books or hiring a researcher.
Legal and Professional Services: You can deduct fees that you pay to attorneys, accountants, consultants, and other professionals if the fees are paid for work related to your business.
Insurance: Self-employed people, including writers, are also allowed to deduct 100% of their health insurance premiums from their income taxes. But this deduction is limited to the annual profit you earn from your business. In addition, If you have a home office, you may deduct a portion of your homeowner's insurance.
Internet Expenses: If, like most writers, you use the Internet for research and marketing purposes, you may deduct the business portion of your internet connection fees.
Websites: You can deduct the cost of designing and maintaining a website you use to promote your writing business. You can also deduct your Internet hosting fees and the cost of obtaining a domain name.
Outsourcing: If you hire people to help with your writing business, you may deduct the cost as a business expense. For example, you could deduct the cost of hiring an editor to edit your work or a proofreader to proofread it.
Agent Fees: If you have a literary agent, you may deduct all the fees that person charges.
Business Travel: You may also deduct your expenses when you go out of town for your writing business--for example, to attend a writing-related conference or workshop, conduct an author's tour, or do research or interviews for a specific article or book. These expenses include airfare or other transportation costs and hotel or other lodging expenses. But, you may only deduct 50% of the cost of meals when you travel for your writing business. If you plan things right, you can even mix pleasure and business and still get a deduction.
Meals: The days of the deductible three-martini lunch are pretty much at an end. But you may deduct 50% of the cost of meals that are business-related. You must be present at the meal and it must be furnished to current or potential business associates or contacts. The IRS does not require that you get a specific business benefit to take this deduction. Starting in 2018, you may not deduct entertainment expenses—for example, treating a publisher or agent to a baseball game or the theater.
Phone Expenses: You get no deduction for the monthly charges for a single phone in your home, whether a land line or cell phone; but you may deduct extra costs for long distance phone calls and special phone services you use for your sales business such as call waiting or message center. You may deduct the full cost of a second phone you use for business, including a cell phone. If you use a second phone both for personal and business calls, you're required to document your business use.
Local Travel Expenses: Local travel may include trips to your publisher, to pick up office supplies, or driving to libraries and bookstores. You may deduct trips by car or public transportation. If you like recordkeeping, you can keep track of all your car expenses to figure your annual deduction. But, if you'd rather not keep track of how much you spend for gas, oil, repairs, car washes, and so forth, you can use the standard mileage rate. When you use the standard rate, you only need to keep track of how many miles you drive for business, not how much you spend on your car. If you elect to use the standard rate, your annual depreciation deduction is limited (check the IRS website for the amount).
Pass-Through Deduction: Virtually all professional writers operate as pass-through businesses---that is, the business is operated as a:
- sole proprietorship (a one-owner business in which the owner personally owns all the business assets
- partnership
- S corporation, or
- limited liability company (LLC).
The Tax Cuts and Jobs Act created a new deduction for owners of such pass-through businesses: They may deduct an amount up to 20% of their net income from the business. This is in addition to all their other business deductions. The pass-through deduction is a personal deduction pass-through owners can take on their returns whether or not they itemize. This deduction began on January 1, 2018 and is scheduled to last through December 31, 2025.
