Monday, January 30, 2012

The tax man cometh

Once January comes around, the Toussaint household goes into tax frenzy. We sort through piles of receipts and mileage logs, check registers and credit card statements. The goal is to find all the money we spent on business in the last year.

In 2011, I had a mystery release in hardcover and large print, and I re-released a backlist romance. Those efforts came with expenses: chapbooks, postcards, envelopes, stamps, mailing labels, large envelopes for ARCs and giveaways, plush St. Bernard puppies to launch the mystery, an ISBN bundle from Bowker, and a new book cover - plus author copies to sell at local festivals. I tried a Facebook ad this year for the indie pubbed book. Ca-ching!

Then I looked at conferences. I hit three in 2011: Malice Domestic, Killer Nashville, and Writer's Police Academy. We drove to all of those places, so we kept track of all the mileage. Other receipts I have from the trip include lodging, food, and research books. And yes, all books I buy at conferences and in my genres are research material. Hang onto those receipts, friends! Also for the conference circuit this year, I sprang for imprinted pens. Hopefully those didn't get tossed with all the hundreds of conference bookmarks.

2011 was the year of public speaking for me. I spoke to 2 chapters of Florida Writers Association, one romance chapter in St. Augustine, one beginning writers conference in Jacksonville, a couple times at my home chapter in Jacksonville, and at an event in the Outer Banks, N.C. For some of these I had lodging costs and for all, mileage to write down. Some of these events paid honoraiums, so the record of the payment is a tax document.

I rented a booth at several festivals this year for the purpose of selling my books. Those booth fees, plus the hardware apron I bought to be my money holder, are business expenses.

Then there were professional memberships. I'm in RWA, MWA, SINC, Florida Writers, and McIntosh Art Association. All those dues are tax deductible for writers. Plus reference and research materials - like my RT magazine subscription. Definitely biz related.

I transitioned from a desktop to a laptop in 2011. The new computer, software, and virus protection - all business expenses. I also had a bill come in from my webhost - my multi-year package of hosting was up for renewal - business expense. Also, website updates, which I pay for, these count as business expenses. Toner for the printer and paper for the printer - bought several of each in 2011 - added to the tally.

I also had a few unique office expenses. After I knocked a full glass of iced tea all over my sticky note pile of different passwords, I realized I needed a better system. I bought an old fashioned Rolodex, and I've been quite pleased with it. File folders, binder clips, and even batteries for your computer mouse - business expenses.

If you pay someone to do your taxes, it's a business expense. Don't forget to count that on your own taxes.

On the income side, total up your advances, royalties, speaker fees, honariums, festival proceeds. If you edit for money or write short stories for magazines - all biz income.

I decided to branch out this year and create postcards of my home town. That printing cost is a business expense. Income generated from them must also be tallied.

If I've left something out, please chime in with a comment. Let's all make sure we don't forget a category of expenses.

Maggie Toussaint
Death, Island Style, March 2012 - the artsy lady is accused of killing the dead guy in the surf
Murder in the Buff, March 2012 - murder blooms in the naturalists' garden

20 comments:

  1. Wow! Thank you, Maggie. A real mine of information on all those hidden deductable costs! :)

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  2. I'm glad you found my ramblings helfpul, Sheryl!

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  3. I'm just beginning that process, Maggie, so thanks for your reminder of the deductibles.

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  4. Maggie--Thanks for all the reminders. My DH is very organized and prepares a folder at the beginning of the year called 2011 taxes in which he throws all the receipts related to my writing business, conferences, chapters, memberships. I have a business folder on my computer for all emailed receipts. But I usually don't save anything about the books I buy, or mileage. We just bought a desk top computer for me. Next year I'll have to remind him, it can be a tax deduction.

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  5. Hi, Maggie,

    Good information and advice!

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  6. Maggie--I apologize, but I could not read your post. I'm sure it is scintillating and engrossing, but you see, anything to do with taxes, tax returns, percentages, royalties, investments, or any kind of numbers makes my eyes glaze over and I get a headache, and then I have to lie down, but have a glass of wine first.
    Thank goodness I live with an accountant who once worked as a tax accountant for one of the international accounting firms, which is now Deloite.
    When you get back to posts I can comprehend, I'll be here first...right on the money...mark...spot.

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  7. Celia, you're one in a million! See you back here next week with a normal post.

    Jacquie and Brenda, thanks for stopping in.

    Mona, I'm glad you found new categories of things to claim on your writerly taxes.

    Keep 'em coming!

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  8. Taxes, there has to be a better way then to file. I'm still thinking tax everyone the same. Hope you don't owe!!

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  9. Ugh! My business is why I hate doing our taxes every year! I'm so unorganized it takes forever to pull it all together. *sigh*

    You can also claim an office in home and take part of your electric bill, but be very careful about that one. It HAS to be a separate work space with no personal stuff in it. And those are likely to get pulled for audits faster, so be sure your duckies are in a row!

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  10. I even take off Netflix because I'm a screenwriter. I already have my file box with 2012 that has a couple of receipts in it. I make a notation on some of the receipts so I don't forget what the heck it was for...if you're audited you'll like the reference later on.

    I believe the home office expenses has changed somewhat, so many people are claiming it, that it doesn't guarantee an audit anymore. But check with your accountant to be sure.

    As a creative writer, I do need that gnome in my office. He's holding a book, and the feathered hat on the file cabinet, well I need that too. As well as the pith helmet that I bought for two bucks. Not to mention the five foot tall cardboard picture of the cover model that I won at RT. All for the creative mind.

    Great post Maggie!

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  11. ACCCKKK - I'm confused already and I haven't even started mine. I keep staring at that BIG envelope with all my receipts, etc., and my motivation drops . . . even lower.

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  12. Hi Mary, It usually works out tax-wise for us so that we don't have to sell a kidney to pay them. HOping you sort through your tax receipts and find good news as well.

    Loraine, I forgot about the home office part. I have a home office, but it's also "my" room. I think my husband claims the square footage on our LLC tax file. Thanks for the reminder - I've made a note to double check that with him.

    Pepper, I love that your gnome is essential in your office. I have a bobble-head Monk figurine that I use when I want someone else's approval. I also have two palm-sized bean bag frogs which are absolutely essential to the creative process. I toss them one at a time from hand to hand, sometimes red-dy and sometimes greenie. You'd like I could come up with better names, but that's what my kids dubbed them and it stuck.

    PL, I dread the experience as well, but once its done, you feel like dancing! Use positive reinforcement or set a goal of something you really want to reward yourself when its all done. Maybe you want a hanging basket of pansies, maybe a trip to the ice cream shop, maybe a car wash or a new blouse - whatever makes you want to be done. My treat is lunch tomorrow with 2 of my best childhood pals. Yay!

    Thanks for the comments folks! I always appreciate hearing from friends and new friends I haven't met yet.

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  13. Maggie,
    Thanks for blogging on this topic. Taxes and what to apply can be confusing. I think keeping track of the miles I travel for business expense deductions are the most challenging to remember. Take care and wishing you another amazing year! *Hugs*

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  14. Maggie, thanks so much for reminding me about the deductables. Our taxman is a pretty good guy. Last year I asked him if I could deduct my paper, pens, ink cartridges, postcards, etc. He said, "You really don't make enough in royalties to do that." (Tells you the sad state of my royalties, I suppose) I'm hoping this year to enough roytalities to finally start claiming some writing deductables.

    Smiles
    Steph

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  15. Hi Diana, The way I remember mileage is to write it down each time. I couldn't remember anything by the end of the year if I didn't!

    Steph, I hope your royalties pick up! Your books are getting such great reveiws and you are doing such a good job promoting them. 2012 is going to be your year. I'm not sure of the correctness of your tax guy on the deductibles. Maybe he means that your'e better off not itemizing these kind of deductions and taking a standard deduction? I can't quite quote you the law because my brain doesn't work that way, but every accountant we've ever hired has asked me to itemize my writing expenses. I don't understand where your tax guy is coming from. I hope he's doing a good job for you otherwise!

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  16. Hi Maggie! Taxes always get me down. But I do tend to reap a nice return (I know, I know, a lot of folks say I shouldn't like that cuz it lets the govt have too much of my money up front. Phooey, I say. It works for me!).

    Cheers to a harmonious tax season!
    Keely

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  17. I am shuddering at StephB's taxman's advice, which I disagree with, but won't comment on further because I do not know your complete circumstances or his grand plan.

    Please get responsible tax help. Find a tax professional who knows publishing and who knows sole proprietorship small business. Most non-publishing tax professionals are far too conservative about deductions because they do not understand our field.

    A good way to find a competent publishing tax pro is to talk to successful writers. Ask them for referrals.

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  18. Taxation and what to utilize can be complicated. I think monitoring the kilometers I journey for business cost breaks are the most complicated to remember.

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  19. Well Maggie, it’s interesting to remind us about the important thing which mostly we are not doing on organized form, but luckily me doing the organized work about all the stuff, expenditures and costing. It should be very important to organize all the expenditures stuff to maintain budgeting. I have a pocket folder which is dedicated to put all the related recipient, taxes slips, salary slips and expenditures list, which is every time in my pocket.:)

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