Who We Are:
Writers are considered a sole proprietorship, or simply stated–self-employed. If you receive income from active royalties, or lump-sum payments; this income is expected to be declared if the yearly total is over $500. This also gives you the right to claim expenses, so start keeping your receipts.
I suggest calling the IRS for a list of applicable expenses, but you could start with this link, which was the main source of my information.
Canada Revenue allows us to total our incomes, day job and writing income. That total income is available to use for all applicable tax deductions.
Our manuscripts are art, Canadian culture, and Canadian Revenue want us to keep track of our inventory–Works in Progress, unsold manuscripts, etc. They are to be assigned with a monetary value because as we become more popular, their values will increase.
We are also considered a cottage industry, and can claim part of our home. If we use a room exclusively for writing, we can claim a percentage of our mortgage, heat, phone, etc. Promotional expenses, must improve sales, therefore, travel expenses for book signing can be calmed because each customer must buy a book to have it signed. Another category is general business expenses–long distance calls, snail mail, and office supplies. I’m very tempted to ask about blogging, which would add internet expenses to the applicable list IMO.
We do have to prove ourselves as active writers. It would be wise to track or document hours spent writing each day. Being an active member in a writing circle, membership with professional associations (fees are another deduction), also help establish the pursuit of a writing career. Again call Canada Revenue and ask for a list of applicable deductions. Here’s the second link. if you care to take a look.
For all countries, keep your receipts, check with an accountant or your taxation office.
Keep in mind, I am not an accountant, this post is an attempt to help my fellow writers save some money.