Guess who's coming to town now that Santa has gone back to the North Pole? The Tax Man. Tax time is coming sooner than you think and writers everywhere are gearing up to pen the most vexing manuscript of the year: IRS tax forms. If this is the first year you've made money with your writing--congratulations!--but you might be wondering just how to handle filing your taxes.
If you are comfortable reading the cryptic and frankly Byzantine IRS rules, then have at it, but if you can't make heads or tales out of them, you might try a program like Turbo Tax. With basic questions, this program can help you organize everything and enter the correct amounts on the right lines of your 1040 and Schedule C.
If you've raked in oodles of money you probably need to hire a certified public accountant (CPA) to handle your tax returns, but for those earning modest amounts, places like H&R Block can do the job at a reasonable fee.
Regardless of how you choose to handle your taxes the best thing you can do is be prepared. Throughout the year, keep track of your income such as advances, royalty checks, and any speaking fees or honorariums. You'll also want to track your expenses such as travel, postage, agent fees, writing materials, and any contest entry fees. If you are not comfortable using a spreadsheet such as Excel or Quattro Pro a simple spiral bound notebook will work just fine. It doesn't have to be fancy it just has to keep track of everything you get or spend.
Also, check out the September 2007 issue of the Romance Writers Report for an informative article by Dianne O'Brian Kelly. Dianne is a CPA/tax attorney and a talented humor writer. In her article "At a loss for Words? Claim those tax deductions!" Dianne discusses some common misconceptions about deducting expenses even if you haven't shown a profit. Diane has other tax information on her webpage at www.blarneybabe.com
You can find detailed information about any tax form at www.irs.gov