Thanks for those links, Marilynn. You can write off items for a while, but you have to prove you’re in it to eventually make a profit. The IRS has guidelines on the difference between a business and a hobby, and you can’t write off hobby expenses in the same way as you can those for a business. For anything other than working with horses, the rule is “The IRS presumes that an activity is carried on for profit if it makes a profit during at least three of the last five tax years, including the current year.”

http://www.irs.gov/newsroom/article/0,,id=169490,00.html

All you have to do is prove that you are a working writer. This can be as simple as having copies of your rejection letters.

I’m not an accountant or tax attorney so here are some experts to give you the details.

“Authors and the Internal Revenue Code” (written by author Linda Lewis who is also a tax attorney)

http://www.eclectics.com/articles/taxes.html

Article on self-employed writers, recently updated

http://www.tarakharper.com/k_tax.htm

“Taxes for writers” by Cyn Mason (copyrighted 1996 so may be out of
date)

http://www.forwriters.com/taxes.html

That’s known as the Individual Recreation Account round these parts.

In Wisconsin, I believe it’s illegal to give up your beer money though you can transfer up to 75% into a tax-deferred cheese account.

Good recommendation as well. I’ve never managed that because of the expenses of raising five young kids, but I dream of one day getting to it. Also, I’m not giving up my beer money. 🙂

But for the stalwart few, I recommend socking some of the money into either a 401K or an IRA. If you sort it out right, you can end up all but alleviating the tax burden. Course, there goes your beer money.

Hi Ray! I remember you well. Putting aside money into an account is another great idea. It’s too tempting to spend it otherwise. I pay myself bimonthly and usually set aside the money at that time, although since it’s just me I can opt to pay the withholding quarterly instead without penalty. (I think way too much about this stuff.)

Thanks! Just seemed like the right day for it. 🙂