I almost didn’t post this blog. I understand the IRS has more information on people than the FBI and the CIA combined. I have no desire to draw any more attention from them than I have to.
Obviously that’s understandable, but it doesn’t make me any more comfortable with the fact.
But this blog is about writing and the IRS. Those who are fortunate enough to see some success in writing–selling books or articles–will live to see some, nay a lot, of that success taken away from them when the IRS cometh. I remember one year making $4,500 in writing royalties, only to have to pay $2,300 in taxes.
Why? Because in addition to the fact that publishers and places like Amazon don’t take out taxes like your day job does, you are considered self-employed. Because you are self-employed, you are very likely required to pay a self-employment tax. The more successful you are, the more tax you will need to pay.
I don’t know all of the answers, but I have been doing this for several hundred years, so I can speak from experience. I have considered putting everything directly into retirement, which would be a write off. I even considered having royalties paid in my child’s name, which is highly illegal, so I didn’t do it. I am wary enough about an audit that I am usually pretty conservative when I file my taxes. And yes, I do my own.
That’s probably something to reconsider when it comes time to retire, which for me will just mean writing full time. If I am as successful as I hope to become, I will need some kind of tax shelter. The bottom line is I would rather donate it to my University or my Church than give it to Uncle Sam. But as they say, “Render unto Caesar, the things that are Caesar’s…”
I have been hit pretty hard the past few years, but this year it worked out that I only owed $176. With my plans to launch four new book in 2013, that may change.
As always, if any fellow writers have any brilliant ideas, I am open to them.