Okay, I've become aware that a lot of American writers on here don't know about taxes for their business (writing is your business!) so I'm going to do a lil thread on the subject.

DISCLAIMER: Your financial situation is unique, and you're best served by taking this rough overview and talking to a certified accountant, particularly one who specializes in working with freelancers/artists.

DISCLAIMER, CONT: In MN, we have some nonprofit arts organizations that connect artists with arts lawyers, accountants, etc. It's a good idea to start there!

ADDITIONALLY, in this thread I am speaking specifically of the finances for a writer once you start bringing money IN (for pre-monetization tax info, see note about accountant above)

OKAY! Here we go!

First, all, and I mean ALL the money you receive as a writer (unless you have one of the twelve staff media jobs) does not have taxes taken out. That's because you're technically a freelancer/contractor

Immediately, open up a new savings account at your bank/credit union. Name it "Savings for Biz Tax" or the like. As a rough rule, 1/3 of what comes in should go in there immediately so you're able to pay your regular taxes + the stuff an employer might pay for you

Now, as a technical freelancer/independent contractor, the US Government will want you to pay your taxes quarterly--now, this gets messy because as a writer, it's hard to plan how much and when you'll get paid. Uncle Sam wants you to guess and pay him anyway.

Talk to your agent/editor about the specifics of your book's schedule and plan to pay in taxes 1/3 of what you receive in a CALENDAR YEAR (divided into four parts).

Your agent will also be able to help you guesstimate royalties, which you probably won't have to worry about the year your book pubs anyway, even if you earn out, due to delayed royalty payment schedules and also the publisher reserving some royalties to cover returns

Note that it's your agent's job to collect statements and payments from your publishers and, at the end of the year, issue a 1099 (like a W-2 for freelancers). HOWEVER, a business isn't always required to issue a 1099 so you should make sure you're keeping track of your income

Now, for the fun part--deductions! This is when you'll hear freelancers/self-employed people talk about their "Schedule Cs"

As you're running a business (even if you don't file paperwork, your writing is a sole proprietorship), you have expenses! DEDUCTIONS reduce the amount of income that is considered "taxable" and lessen the tax burden on self-employed people (IF they keep track of their shit)

What is specifically able to be deducted for you varies, but I'm going to list the basics for a writer/publishing professional:
—Home office (take pics--it needs to be ONLY used for business and it's deducted based on % of sq ft in your home

—Internet/phone (usually this is a partial deduction, depending on how much of the time you use it for writing)
—Subscriptions to Office, Scribner, research orgs, etc
—Pens, paper, printer ink, etc
—Books! The Holy Grail! Save your receipts for this necessary "research"

—Travel (save receipts!) This includes:
-flights/cabs/car rentals
-hotels
-conference admission
-If you're driving, track your miles! You can deduct these too
-Food/entertainment (these are deducted at a lower rate so make sure to save every receipt!)

—That pre-pandemic coffee with another writer? A good dinner with Internet Publishing Friends? Did you talk biz for like a minute? WRITE IT OFF! (Tip: write ON THE RECEIPT what business you discussed at a meal)

—Mailing supplies
—Promotional materials
—Business cards
—Services like website design, logo design, avi design, etc
—Email client
—PR or Marketing costs

(sorry, clothes don't count)

Also, for the love of all that is holy, WRITE OFF YOUR COMPUTER AND VARIOUS BACKUP SYSTEMS (also cords and headphones if you use them to write)

When in doubt? SAVE THE RECEIPT and have your accountant figure it out for you.

Self-employed people (particularly with high deductions /home office) have a slightly higher risk of being audited, but unless you’re in a high tax bracket, you probs don’t have to worry that much.

All of these deductions add up to what's called a Schedule C--unfortunately, it's something that requires a lot of leg work and no one ever does it for you. I recommend reserving 1-2 full days for tax-related prep, even if you're handing it over to an accountant

Note: your agent, if you have one, should be able to talk you through this in more detail. ASK THEM. My agency, for example, partners with an accountant who will consult with our authors for free, in addition to doing the normal collecting checks business.

If you have an agent, also get an accountant! If you do NOT have an agent, get thee to an accountant ASAP! Also, talk regularly with fellow authors about taxes and deductions. No one makes enough in this biz to leave deductions on the table!

One thing your agent should ALWAYS tell you is that their 15% cut is ALSO deductible! Consider this to be the lowest bar for "am I doing my Writer Taxes right?" Luckily, this 15% is easy because it's in the paperwork the agency issues you (though it won't be on your 1099)

Also I forgot to mention you can also write off contest fees (though you shouldn't write off agency reading fees because THESE ARE A SCAM AND YOU SHOULDN'T BE PAYING THEM)

This brings us to the end of the thread because I'm tipsy and out of thoughts, but know that I definitely missed possible deductions and also your situation is unique! I wish you continued happiness for you and your accountant (whose services you also deduct!)

(And yes, your agent should be able to talk about freelance taxes/finances even while tipsy too!)