4 Last-minute tax tips for writers #taxes #author

4 Last-minute tax tips for writers #taxes #author

Panicking because you aren’t ready for today’s tax deadline? Here are some last-minute tips to make the process a little less painful. To get all the deductions you deserve and plenty of tax planning and prep advice, check out EM Lynley’s book Tax Tips for Authors.

If you try to rush through a Schedule C in a day or two, I guarantee you will miss deductions and end up paying more tax than you really owe, especially if this is the first or even the second year you are filing a Schedule C as a writer. There are a lot of specialized deductions you may not know about, and it’s worth the effort to keep good records and allow enough time to properly prepare your tax return.

Also see 5 Things Authors Miss on Their Tax Returns

1. Didn’t get organized in time? File an extension. If you haven’t got your expenses tallied in time to get all the deductions on your Schedule C, don’t worry. You can file an extension that gives you until October 15 to file your return: another six months to get your act together. Most tax software has an extension option, or you can go to the IRS website and download the PDF at the link below. Fill it in and mail it to be postmarked by April 15.

The caveat here is that the IRS expects you to pay what you owe now, even if you haven’t completely figured it out! If you have a refund coming, don’t worry, you don’t have to do anything. But if you have a balance due, or you aren’t sure, make sure that between withholding and other tax payments that you pay as much as your tax liability from LAST year. Then you won’t get an IRS penalty. You may owe interest on the difference, but it’s far less than the penalty for under-withholding during the year and not paying anything by April 15.

Form 4868 Extension Request

Tax liability is on Line 61 of Form 1040 for last year.

2. Owe money to the IRS and you can’t pay it by April 15? That’s not as big a problem as it sounds. Go ahead and file your return on time, and send what you can afford now, even if it’s just $10. The IRS is happy to send you a bill for the remainder, and that letter will have instructions for setting up a payment plan. You can take up to 5 years to pay any balance due, at a monthly payment that’s affordable for you, as low as $30 or $50 a month.

Remember: the penalty for NOT filing is 5% of the balance due per month, up to a maximum of 25% of the amount you owe. But the penalty for paying late is only 0.5% per month, just one-tenth of that amount. File, then figure out how to pay later and you will save yourself a lot of money and a lot of stress.

3. Realized you forgot to claim something after you filed, or are you missing a vital receipt for a deduction? Not a problem. You can file an amended return up to three years after the due date. For 2013 returns you have until April 15, 2017 to correct anything you forgot to deduct. You’ll file a Form 1040X (Amended Return) for the specific year you need to correct, after you’ve redone your return with all the deductions you are entitled to.

4. Want to reduce your 2013 tax liability? The only way to fix what you owe for 2013 now is to put some money in a traditional IRA account by April 15. You can deduct up to $5,000 of traditional IRA contributions, depending on your income level and whether you or your spouse is covered by a retirement plan at your day job. Roth IRAs aren’t deductible. They are made with post-tax dollars, so they’re completely tax free when you take the money out in retirement.

NOTE: IRA contributions only reduce your income tax liability, not your self-employment tax liability.

Get more useful tax prep and planning advice in my book Tax Tips for Authors. It will help you get all your deductions for 2013 and get organized in advance for 2014 tax filing, with lots of essential bookkeeping advice.

(Available from Amazon, B&N, iTunes, Smashwords and AllRomance/OmniLit and in print)

Want even more information? Sign up for my Tax Tips Newsletter, or visit the Tax Tips for Authors website. Best of all, pick up a copy of my book Tax Tips for Authors 2014. It’s got new information for filing 2013 returns, a Schedule C walkthrough, chapters on self-employment taxes and quarterly payments, and a whole lot more.

Available from Amazon, B&N, iTunes, Smashwords and AllRomance/OmniLit and in print

 

EM Lynley is a former investment analyst and White House economist. For the past five years she has been much happier writing erotic romance. She loves books where the hero gets the guy and the loving is 11 on a scale of 10. Her Precious Gems series is best described as “Indiana Jones meets Romancing the Stone”—only gayer. The Delectable series is Gay Romance with Taste. Her books are available in print and e-book from Amazon & other book distributors.

 

Visit EM online Website Blog FacebookTwitter

 

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5 Things Authors Miss on their Tax Returns

 

taxtipscover200In my real life I’m a tax and finance professional and I’ve been sharing my knowledge with other writers for the past three years. I find many people have problems with the same issues year after year. Are you making these mistakes?  If so, you’ll find more ways to solve these problems (and more) in my book Tax Tips for Authors 2014. (Available from Amazon, B&N, iTunes, Smashwords and AllRomance/OmniLit and in print)

 

1. Calling your hobby a business – or vice versa

The IRS has a pretty strict line between hobby and business, because businesses get to write their losses off against other income (W-2 or investment income) which lets them lower their taxes. To be considered a business you need to have profits in 3 out of the past 5 years. It you’re having more years of losses than profits, the IRS may want you to prove you’re a real business, which means show that you are trying to make money. They look at the ratio of expenses to earnings and the type of expenses you claim: advertising and other promo help you, but travel to conventions may hurt you if you’re not earning enough to justify the expense.

Businesses that claim to be a hobby are seen as avoiding self-employment tax, so if you have increasing hobby income, the IRS may force you to file Schedule C and pay SE tax. Make sure you classify your writing correctly.

2. Not filing quarterly estimated tax payments

This is one of the most confusing aspects of self-employment and for authors it’s even more complicated: earnings and expenses fluctuate wildly during the year. Some people just ignore it, then get both a big surprise balance due in April, plus a penalty for not paying quarterly. There are ways to avoid this, the easiest being to pay at least 110% of last year’s tax bill in quarterly installments. If you overpay, you’ll get a refund, but you’ll definitely avoid a penalty. I go over how to calculate the correct quarterly payments in my book, Tax Tips for Authors 2014.

3. Paying too much self-employment tax

How do you pay too much? By not taking all the deductions you can, and by not keeping a careful running balance of profit and loss during the year. You only pay SE tax when you have over $400 of profits, so if you can reduce profits (by increasing legitimate spending during the tax year) you can save some money.  Make sure to do a tentative P and L calculation in early December. It may make sense to register for expensive conventions then rather than waiting till January. Buy a new computer or pre-pay for advertising. Shift only planned spending rather than simply spending down your profits carelessly, so you can build your business rather than just avoid taxes.

 

4. Missing out on deductions

Most authors I work with don’t keep good records of their spending. This includes mileage driven for “business.” Did you write down every time you drove to the library, book store, airport, etc.? Get in the habit of writing down your mileage and other expenses every day or two—before you forget—and you’ll see how much more you are able to claim. Keep receipts for books, index cars, notebooks, stock photos, domain names, lunch with your writing partner, swag, etc. This will also help you keep a running P and L for filing quarterly payments and making good year-end spending decisions. I have much more information on proper recordkeeping and deductions in the book.

5. Mixing business and personal expenses

Along with the hobby/business issue, this is one of the things IRS loves to investigate.  The best way to keep everything separate—even for sole proprietors—is to have separate bank accounts and debit or credit cards. It’s easy to have a separate PayPal account just for your writing business, and you can get a PayPal debit card. An Ally bank account is free and requires no minimum deposit and they issue debit cards as well. Have all your payments made into the separate accounts, and spend only from the business PayPal/Ally debit card.  If you need to use a credit card, ask for an additional card from your credit card company and use the new one only for business. At the end of the year you can get a separate statement of your business expenses, which makes recordkeeping and organizing deductions a snap.

 

Want even more information? Sign up for my Tax Tips Newsletter, or visit the Tax Tips for Authors website. Best of all, pick up a copy of my book Tax Tips for Authors 2014. It’s got new information for filing 2013 returns, a Schedule C walkthrough, chapters on self-employment taxes and quarterly payments and a whole lot more.

Available from Amazon, B&N, iTunes, Smashwords and AllRomance/OmniLit and in print

 

 

OutoftheGate_FBThumbEM Lynley is a former investment analyst and White House economist. Now she writes gay erotic romance. She loves books where the hero gets the guy and the loving is 11 on a scale of 10. Her Precious Gems series is best described as “Indiana Jones meets Romancing the Stone”—only gayer. The Delectable series is Gay Romance with Taste. Her books are available in print and e-book from Amazon & other book distributors.

Visit her online Website Blog FacebookTwitter

 

March Tax Workshop for Authors — still time to register #taxtip #writing

http://www.dreamstime.com/stock-image-tax-image13319621The March workshop is the last one before taxes are due on April 15.

As some of my readers know, in RL I’m a tax and finance professional, and I’ve been using that knowledge to teach my tax workshops.

Whether you like it or not, it’s time to stop procrastinating on your tax return. We have a lot of new authors here who may be filing Schedule C for the first time and probably have a ton of questions. New self-publishers may also be wondering how that will change your tax return. I know how many questions I had even after my first year of earning, which is why I became a licensed tax preparer four years ago.

Whether you are an old hand or a new author you will learn something new.

Three years ago I started offering online workshops for other authors. The final workshop begins March 15 and runs through March 30. I run the courses on a Yahoo Group. You will get an invitation to join the group after I receive your payment. You don’t have to be online when each lecture is posted. You can read at your leisure, then ask questions when you need to, or read other peoples’ questions.

I’ll cover everything you need to know about filing a tax return/Schedule C with special emphasis on the kinds of expenses and issues writers have. There’s a whole session just on self-publishing. (Don’t like online classes? Check out my book Tax Tips for Authors 2014 Buy the book. Also available at Smashwords and coming soon to iBooks, B&N and Kobo)

Comments from previous participants:

“Loved the class! So much information was given–and on things I had no idea existed!”

“As a newly published author, I had no idea where to begin with taxes. This class explained everything in an easy to understand format. I feel ready to go!”

Tax Workshop for Authors ($30) —

Register Here

Consists of about 12 lectures to read at your own pace, open Q&A throughout the course and for at least an additional week. You will have unlimited access to the course lectures, Q&A, plus the option of one private tax question answered off the group.

Writers, are you stymied by Schedule C and self-employment tax? Not sure you’re getting all the deductions you deserve, or uncertain precisely what the IRS allows? You just want to know how to fill in your forms and what you can and can’t deduct. I will answer those questions, as well as provide additional useful and necessary information for tax planning and recordkeeping.

As both a writer and a tax preparer, I offer expert knowledge that usually costs hundreds of dollars in tax prep fees.

Lecture topics include: Self-publishing Issues, Hobby vs. Business, Legal Issues, What Expenses are Deductible?, Schedule C Walkthrough, Self-employment Tax, Quarterly Estimated Tax, Deductions for Unpublished Authors

Register Here

 

 

#Tax Workshop for Authors starts soon #writing #selfpublish @emlynley

http://www.dreamstime.com/stock-image-tax-image13319621As some of my readers know, in RL I’m a tax and finance professional, and I’ve been using that knowledge to teach my tax workshops.

Whether you like it or not, it’s time to start thinking about your tax return. We have a lot of new authors here who may be filing Schedule C for the first time and probably have a ton of questions. New self-publishers may also be wondering how that will change your tax return. I know how many questions I had even after my first year of earning, which is why I became a licensed tax preparer four years ago.

Whether you are an old hand or a new author you will learn something new.

Three years ago I started offering online workshops for other authors. The next two start February 18 and March 15. I run the courses on a Yahoo Group. You will get an invitation to join the group after I receive your payment. You don’t have to be online when each lecture is posted. You can read at your leisure, then ask questions when you need to, or read other peoples’ questions.

I’ll cover everything you need to know about filing a tax return/Schedule C with special emphasis on the kinds of expenses and issues writers have. There’s a whole session just on self-publishing. (Don’t like online classes? Buy the book.)

Comments from previous participants:

“Loved the class! So much information was given–and on things I had no idea existed!”

“As a newly published author, I had no idea where to begin with taxes. This class explained everything in an easy to understand format. I feel ready to go!”

Tax Workshop for Authors ($25) — Registration

Consists of 15 lectures to read at your own pace, open Q&A throughout the course and for at least an additional week. You will have unlimited access to the course lectures, Q&A, plus the option of one private tax question answered off the group.

Writers, are you stymied by Schedule C and self-employment tax? Not sure you’re getting all the deductions you deserve, or uncertain precisely what the IRS allows? You just want to know how to fill in your forms and what you can and can’t deduct. I will answer those questions, as well as provide additional useful and necessary information for tax planning and recordkeeping.

As both a writer and a tax preparer, I offer expert knowledge that usually costs hundreds of dollars in tax prep fees.

Lecture topics include: Self-publishing Issues, Hobby vs. Business, Legal Issues, What Expenses are Deductible?, Schedule C Walkthrough, Self-employment Tax, Quarterly Estimated Tax, Deductions for Unpublished Authors

Registration

 

 

7 January Tax Tips for Writers #taxtip

dollar-sign-bookJanuary means two things in the tax world: time to start thinking about the 2013 tax return, and a new year of records to begin keeping for 2014. If you self-publish, you have even more expenses and obligations, so start the year off on a good footing.

I’ll start off with the easy part first: new recordkeeping.

No one likes keeping track of everything, but the more information you write down each day or week, the less you’ll have to remember when it comes to filing your taxes. How many deductions do you think you might have missed because you forgot to write something down?

Good recordkeeping = less tax paid

If your writing brings in the majority of your income, you may also need to be sending in estimated tax payments throughout the year to avoid IRS penalties. You’ll need an accurate profit and loss snapshot each quarter to do this correctly. I’ll talk about this in a future posting.

Get a start on keeping better records of income and expenses in 2014.

Recordkeeping Tips for January

1. Get a special calendar (I like the 2-page per month type). Use it to write down business expenses each day or week. Don’t use it for appointments or try to scribble expenses in your regular calendar. You’ll appreciate having everything in one place later on.

NOTE: If you have another writing-related business like editing, cover art or formatting, get a separate expense log for that business. You may want to file a separate Schedule C for that business, so keeping separate records will make that easier for you.

2. Write down your car’s odometer reading in the calendar. For mileage deduction on Schedule C, you’ll need to know how many miles you drive per year for all purposes.

3. Do you pay someone else for editing, formatting, cover art or similar? If you pay anyone more than $600 in a year, you will need to send them a 1099-MISC and you should consider issuing one even if the amount is lower. In order to do so, each person you pay should fill in form W-9 for you. Have everyone do this at the beginning of the year, then it’s easy to deal with once you hit the $600 limit. If you don’t have a W-9, the IRS expects you to withhold 20% of the payments. (We talk about this in detail in the Tax Tips courses). Download Form W-9

If your cover artist or editor is in another country, they need to fill in Form W-8BEN and send it to you, to prove you don’t need to do the 20% withholding. Protect yourself with the correct forms, regardless of whether the editor or cover artist needs to file a US return. Download Form W-8BEN

4. Familiarize yourself with the categories of deductions on Schedule C. This way you know what you can and should be counting as expenses (and writing in your 2014 expense log calendar). Download a copy of the form at the IRS website: http://www.irs.gov/pub/irs-pdf/f1040sc.pdf‎

5. Print out 2013 statements from all bank accounts, credit cards or PayPal that you used for business.  If you already get paper statements, make a copy for your tax return. Some websites only have the last 12 months of statements available, so if you wait till March or April, you may have trouble getting Jan and Feb 2013

6. Consider joining one of my Tax Tips classes (First session Jan 10-20, Second Session Feb 18-28) for step-by-step help with everything on Schedule C, estimated taxes, self-employment taxes, and more. More information at taxtips.emlynley.com

7. Sign up for my Tax Tips for Authors Newsletter (twice monthly) to get even more useful tax information for authors, or get a copy of the ebook Tax Tips for Authors.

[author] [author_info]EM Lynley is a licensed tax preparer in the state of California. CTEC #A233919[/author_info] [/author]

#Tax Planning Courses for Writers start Jan 10!

coverTaxTips_thumb_EM

The next class starts January 10! Only 8 spots left.

Every spring I run my tax tips class and I always have people saying “I wish I knew that earlier in the year.” (My qualifications)

Yes, January is that time of year when people start thinking about doing their taxes and most of us decide to put it off for another month or three. But if you scramble to file close to the deadline, you may miss important deductions you forgot, or didn’t realize you could take.  You may also deduct something you shouldn’t.

So I’m starting the classes earlier this year, so you can start learning some new recordkeeping tips to also make filing taxes next time around a lot easier.

Now the holidays are over, you may have a little more time to concentrate on how to file your tax return and start some new bookkeeping habits that will help you save money on taxes and help you make better tax-planning decisions in future years.

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Four Course Options

  1. Regular Tax Course ONLY (January 10-20) = $20
  2. Regular Tax Course ONLY (Feb 18-28) = $20
  3. Should I Incorporate? (Feb 1-5) = $30
  4. BUNDLE of both classes $40.00    Save $10

Sign up and pay with PayPal on the Registration Page

You can also pick up a copy of my book Tax Tips for Authors, from my website or Amazon.

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The Course Content

I run the courses on a Yahoo Group. You will get an invitation to join the relevant group after I receive your payment. You don’t have to be online when each lecture is posted. You can read at your leisure, then ask questions when you need to, or read other peoples’ questions.

The Regular Tax Course

Consists of 10 lectures, open Q&A throughout the course and for an additional week. You will have unlimited access to the course lectures, Q&A, plus the option of one private tax question answered off the group.

Writers, are you stymied by Schedule C and self-employment tax? Not sure you’re getting all the deductions you deserve, or uncertain precisely what the IRS allows? You just want to know how to fill in your forms and what you can and can’t deduct. I will answer those questions, as well as provide additional useful and necessary information for tax planning and recordkeeping.

As both a writer and a tax preparer, I offer expert knowledge that usually costs hundreds of dollars in tax prep fees.

Lecture topics include: Hobby vs. Business, Legal Issues, What Expenses are Deductible?, Schedule C Walkthrough, Self-employment Tax, Quarterly Estimated Tax, Deductions for Unpublished Authors

Should I Incorporate?

This one is new. Many people wonder if incorporating is the right move for their writing business. For some it will save taxes, but for others it may prove an unnecessary expense. Find out which business entity makes the most sense for your specific situation: sole proprietorship, S-Corp, or LLC.

Course Q and A

This is the biggest part of the class and what sets it apart from just reading a book. Past classes have had extensive Q&A on specific issues  or individual concerns. I will research any question when I’m not familiar with the issue.

Once you pay the registration fee and log into the Yahoo Group, you can start posting questions. I will address every participant question either within a lecture or separately if it is not covered in a regular lecture topic. Participant questions help shape the course, so I can make sure to address your specific needs.

Registration

Sign up and pay with PayPal on the Registration Page

Questions?

Email me if you have any questions: em@emlynley.com