writers.com feature:

The Taxman (or -woman) Cometh


By Paula Guran

Writers often try to avoid even thinking about taxes. There are all those (shudder) numbers to deal with and we are *word* people. Plus, we're creative types and "being creative" with your taxes is illegal. But it's January and we've all started receiving forms and 1099s and such. Better to be informed NOW -- and perhaps even organized -- than waiting until April 14.

[For readers outside the U.S.: I found some interesting items (like help for "Non-UK resident entertainers or sportspersons" -- http://www.inlandrevenue.gov.uk/feu/) on the UK's Inland Revenue Service Web site (http://www.inlandrevenue.gov.uk/index.htm), but I imagine writers should look at the "Starting up a business" information to begin: (http://www.inlandrevenue.gov.uk/startingup/index.htm). Otherwise, good luck!

Canadians can start with the Canada Customs and Tax Revenue Web Site at http://www.ccra-adrc.gc.ca/menu-e.html has not only the Guide for Canadian Small Businesses (http://www.ccra-adrc.gc.ca/tax/business/smallbusiness/index-e.html), but also offers a Canadian Tax Bulletin for authors and artists (http://www.ccra-adrc.gc.ca/E/pub/tp/it504r2-consolideq/it504r2-consolid -e.html) and Canadian Tax Bulletin -- applying the expectation of making a profit to writing -- http://www.ccra-adrc.gc.ca/E/pub/gl/p-176rem/p-176r-e.htm.

I've also been told that The Writers' Union of Canada is a great source of information about tax issues affecting Canadian authors (and other topics). The info is free for members, but the Web site mentions brochures anyone can order for a fee: Income Tax Guide for Writers ($9.00) and Incorporation for Writers ($5.00).]

Here in the States we deal with the Internal Revenue Service. The IRS these days is a helpful friendly governmental entity (no, that is not an oxymoron) that wants to make the process of paying taxes as pain-free as possible. The IRS Web site is easily navigated, incredibly useful, and even -- in spots -- relatively witty. The many publications of the IRS are not exactly stylishly written, but they get high marks for clarity and near-perfect copy-editing. The material is designed to be purely informational, yet captivating human drama creeps in here and there in the fictional "Examples" used. Here, for instance, is an example explaining a "temporary or seasonal absence":
Professor Paul Beard, who is single, bought and moved into a house on August 28, 1998. He lived in it as his main home continuously until January 5, 2000, when he went abroad for a 1-year sabbatical leave. During part of the period of leave, the house was unoccupied, and during the rest of the period, he rented it. On January 5, he sold the house at a gain. Because his leave was a short temporary absence, he cannot include the period of leave to meet the 2-year use test. He cannot exclude any part of his gain, unless he sold the house due to a change in place of employment or health... (Pub. 523)
Plus, reading IRS publications can be educational in un-taxly ways. There is the occasional mini-refresher course in basic math: "The numerator (top part) of the fraction is the net increase in the value of the home, and the denominator (bottom part) is the fair market value of the home." (Pub. 523)] You'll also find interesting military/legal terminology, history, and geography (also from Pub. 523): "The term 'combat zone' means:
  1. The Persian Gulf Area combat zone (effective August 2, 1990),
  2. The qualified hazardous duty area of Bosnia and Herzegovina, Croatia, and Macedonia, which is treated as a combat zone effective November 21,1995, and
  3. The Federal Republic of Yugoslavia (Serbia/Montenegro), Albania, the Adriatic Sea, and the Ionian Sea north of the 39th parallel, effective March 24, 1999."


IRS Main:http://www.irs.gov/index.html Small Bus/Self-Employed Index: http://www.irs.gov/businesses/small/index.html

Small Business Forms and Publications Index: http://www.irs.gov/businesses/small/article/0,,id=99200,00.html

You can download all of these (below) from: http://www.irs.gov/businesses/small/article/0,,id=98946,00.html So, if the IRS publishes every single thing you'd want to know about your federal income taxes, why do you need me? Well, you don't, but I did find some online guidance and advice that might at least point you in the right direction for do it yourselfers. (I also found articles that weren't very useful. Those aren't listed.) Even if you have professional tax advice, realize that MOST CPAs (outside of Los Angeles) and tax attorneys do not deal with the unique needs of writers (or other artists). It's always best to be somewhat knowledgeable yourself.

But, let's start with a CPA who evidently *does* know his stuff:

RILEY & ASSOCS., P.C.
http://www.arts-taxinfo.com/index.shtml
Peter Jason Riley is a Massachusetts-based CPA and is the author of The New Tax Guide for Artists of Every Persuasion, "the only complete tax guide available specifically for the working artist." This Web site is designed specifically for artists, including Writers (http://www.arts-taxinfo.com/writers.shtml). You can download an expense checklist or income worksheet for writers in PDF or Excel for writers or a 12-month expense worksheet (in Excel only). Topics excerpted from the book include for Self-Employment Tax Basics (http://www.arts-taxinfo.com/basics.shtml), "when to set up as a corporation or other business entity" (http://www.arts-taxinfo.com/setup.shtml), and more
TIPS YOU MAY NOT FIND ELSEWHERE:
-- A good reason NOT to consider taking a home office deduction (http://www.arts-taxinfo.com/office.shtml): "...when you start utilizing the home office deduction you are essentially converting a portion of your home into a business property. By doing this you may be putting in jeopardy the $250,000/$500,000 exclusion on the sale of a principle residence. Depending on your situation this can be a strong argument against using the home office deduction..."
-- "When you are shopping for a tax preparer please make sure they have some experience in taxation for performers. Also, organize your numbers using [their free] worksheets (and bring along this article), it will make the process easier, cheaper and will help you maximize your deductions. Ask your preparer about other tax saving strategies for self-employed individuals such as retirement plans, health insurance and deduction timing."

FOOLSCAP & QUILL: WRITER'S POCKET TAX GUIDE
By Darlene Cypser
http://www.foolscap-quill.com/wptg2002.html
A comprehensive overview of handling writing expenses, income, and taxes written by an attorney. She confronts the "Writing as a business or a hobby?" question fairly well and does a step-by-step untangling of Schedule C and the home office deduction.
TIP YOU MAY NOT FIND ELSEWHERE: "As a self-employed writer, you may deduct 60% of the premiums you paid for medical insurance for yourself and your family..." Drawback (as of this writing), the site has not been updated for this year.

FORWRITERS.COM: TAXES FOR WRITERS
By Cyn Mason
http://www.forwriters.com/taxes.html
An essay designed to deal with the specific provisions written into law that affect writers. It's from 1996, however, so be aware some advice is dated.

TIP YOU MAY NOT FIND ELSEWHERE: The historic perspective on specific provisions of tax law directed at writers, artists, and film makers makes it all easier to understand

POETS & WRITERS INC.: THE PRACTICAL WRITER: TAX TIPS FOR WRITERS http://www.pw.org/mag/taxtips.htm Good overview and touches on Uniform Capitalization Rules and IRAS, SEPS, AND KEOGHS

TAX ASPECTS OF AUTHORS/WRITERS/SCREENWRITERS
By D. Larry Crumbley, Ph.D, CPA
http://www.bus.lsu.edu/academics/accounting/faculty/lcrumbley/ tax_aspects.html
The ONLY place I found mention of the contribution of unsolicited books. That may not be information YOU need, but a lot of reviewers may.
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