Taxes for Self-Published Authors: What You Need to Know

May 20, 2022 | Written by: Sohail Afzal

Taxes for Self-Published Authors: What You Need to Know

As a self-published author, it’s important to be aware of the tax laws that apply to you. There are a number of deductions and credits that you may be able to take advantage of, so it’s important to understand what they are. In this blog post, we will discuss some of the key things that self-publishing authors need to know regarding taxes. We’ll cover accounting firms vs tax firms, what you can deduct, and some tips for reducing your tax bill. So whether you’re just starting out as a self-published author or you’ve been at it for a while, make sure to read on!

Why Contact an Accounting Firm For Your Taxes?

As a self-published author, one of the first things you need to do is decide whether you want to use an accounting firm or a tax firm. Both can provide valuable services, but they have different strengths. Accounting firms are typically better at bookkeeping and financial planning, while tax firms are better at preparing tax returns and minimizing your tax liability. Depending on your needs, you may want to use both types of firms.

What are Some Tax Deductions You Can Benefit From?

When it comes to deductions, self-publishing authors can deduct a number of expenses, including office expenses, travel expenses, marketing expenses, and more. One of the most important things to keep in mind is that you can only deduct the portion of your expenses that are related to your business. So if you travel for both business and pleasure, you can only deduct the portion of your travel expenses related to your business.

What Are Some Tips For Reducing Your Tax Bill?

There are several tax tips that self-publishing authors can take advantage of to reduce their tax bills.

Deduct Any Losses Incurred

One thing to keep in mind is that you can deduct any losses incurred from your business activity. So if your book sales don’t meet your expectations, you can deduct those losses from your taxes. Additionally, you can defer income by using an accounting method called accrual basis accounting. This means that you won’t have to pay taxes on income until it’s actually received, which can help reduce your overall tax liability.

Find All Your Income From Your Book Sales

It’s important to track your income from your book sales, even if it’s just a few dollars here and there. This is because any money you earn from your books is considered taxable income. So make sure to keep track of all the money you receive, whether from book sales, speaking engagements, or other sources.

Use The Standard Deduction

If you’re not itemizing your deductions, you can take advantage of the standard deduction. For 2019, the standard deduction for individuals is $12,200. This means that you can deduct this amount from your taxable income. This can help reduce your tax bill significantly.

Deduct All Business Expenses

As a self-publishing author, you can deduct all your business expenses from your taxes. This includes office expenses, travel expenses, marketing expenses, and more. So make sure to keep track of all of your expenses so you can deduct them on your tax return.

Report All Your Income Using the Correct Forms

When self-publishing, you’ll need to report all of your income using the correct tax forms. The most common form is Schedule C, which is used to report income and expenses from a business. Make sure to consult with a tax professional to make sure you’re using the correct forms.

Conclusion

As a self-published author, it’s important to be aware of the tax laws that apply to you. There are a number of deductions and credits that you may be able to take advantage of, so it’s important to understand what they are. In this blog post, we have discussed some of the key things that self-publishing authors need to know when it comes to taxes. We have covered accounting firms and tax firms, what you can deduct, and some tips for reducing your tax bill. So whether you’re just starting out as a self-published author or you’ve been at it for a while, make sure to keep these things in mind!

If you have any further questions about taxes for self-published authors, please don’t hesitate to contact us. We would be happy to help!

Sohail Afzal CPA Toronto

Sohail Afzal, CPA, CMA, MBA

Sohail Afzal, (CPA, CMA, MBA) is the founder & CEO of GTA Accounting Professional Corporation. He is a highly experienced Chartered Professional Accountant and businessman himself and understands the challenges that many businesses face when it comes to cash flow management. As an experienced business consultant & tax advisor, he is helping companies grow by providing the technical, financial, and contractual information necessary for strategic decision-making.

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