Blogger: Rachel Kent
What should a writer have in his or her files? With tax time here, I thought this might be helpful.
An author should be able to open up his or her files and find a bunch of information. These files are typically stored in a filing cabinet or scanned in to a computer. PLEASE back up your files remotely and don’t trust that your filing cabinet is fire proof. They aren’t. Even my friends with fireproof safes lost everything in their safes during the California wildfires. The fires were hot and the safes weren’t fireproof enough.
Here’s what I suggest you keep in your filing system:
1) Copies of all of your royalty statements and sales figures.
You should be able to pull these out for each book to get an idea of how well your book is doing, and also you need to include sales figures in future proposals. It’s a good idea to create an Excel chart with title, publisher, date of publication, and the most current number of copies sold.
2) Check stubs or deposit slips (for direct deposits) for all royalty checks.
Believe me, you need these for taxes. You will want to check your 1099s against them and you will also need to note any commissions or expenses (like a bank fee or postage charge) listed on the stubs.
3) Copies of contracts and contract addenda.
Make a copy of your contracts for yourself when you sign them and keep them on file for reference.
4) Copies of marketing plans given to you by the publisher.
Check these frequently to see if there’s something you could be doing to help the publisher get the best results from the marketing they’re doing. For instance, if you know the publisher is running an advertisement with your book featured in a magazine or on a website, invite people to check it out on your Facebook page or blog. Even if your fans don’t go look, you’re still obtaining exposure for your book without directly saying, “Go buy my book.”
5) Copies of professional reviews of your books.
These reviews can be included in future proposals and promotions. A quote from a great review might end up on future book covers. Even if a review is really nasty, keep it, maybe in a different file folder. It’s important to look at bad reviews now and again to learn from them, and you never know what they might mean to you 20 years down the road. Maybe you see it as a nasty review now, but give yourself some distance, and it might become more meaningful.
6) Fan letters that were “gems.”
These letters can provide encouragement and laughs. Author Debbie Macomber has some really cute ones that she shares when she speaks at writers’ conferences. Keep some of your own for days of discouragement.
7) Receipts from business expenses and business travel.
These are also important to keep for taxes. If you make any money from writing in a given year, you can write off all of your writing-related expenses. Plus you can go for a specified number of years developing your craft and submitting projects without earning any money and still write off expenses from your personal taxes. (Talk to a tax accountant to gather the specifics and to see if this still rings true for 2018 after the tax reform.)
Did I miss anything? What do you keep in your files?
Shirlee Abbott
I appreciate the wisdom of keeping the nasty reviews. My first reaction would be to deep-six them. But in truth, there is something good in writing that generates an emotional response–even if it is negative. It means my words touched a sensitive spot in the reader. It might well be a call to prayer: that either I or the reader (or both) would have eyes to see God’s message there.
Crystal Caudill
Thanks for the information, Rachel! This is the first year that I am keeping track of my expenses on a personal side and now have an idea of what to keep track of when I do cross over to filling out 1099s. Thank you, thank you, thank you for the wisdom. It all seems like a foreign language to me.
Angela Arndt
Thanks so much for this list, Rachel! Great list and just the thing I needed. Love the “gems” file idea!
Shelli Littleton
There are so many gems in here. Such a positive outlook. I love what you said about the nasty reviews. I can see how even those might be precious in years to come. An author, retired or maybe on the edge of stepping into heaven, can look back and say, “I was an author.” Very sweet.
Andrew Budek-Schmeisser
Burn the bad reviews; like sad songs, they are malign magnets of misery, tempting you into an abyss when your heart is weak and thoughts low.
* And climbing back out is hard; remember that it takes seven repetitions of “Attaboy!” to make up for a single “Dumbs**t!”
David Todd
Andrew, in my end of the engineering world, the ratio is 50:1. “50 attaboys are erased by one aw s———-.” I even stated that in a City Council meeting once, sanitized, of course!
Andrew Budek-Schmeisser
David, in structural engineering the ratio’s 7:1 because by the time most of us make it through college (working construction to pay the bills), it’s how many fingers we have left.
* Toes don’t count, and one shouldn’t count them anyway, not after a day in steel-toes. I DO know how to spell ‘biohazard’.
Crystal Caudill
I have been think of and praying for you, Andrew. Has the pneumonia eased up at all?
Andrew Budek-Schmeisser
Crystal, I appreciate this so much…the pneumonia was starting to recede when I had a fire in the freezer part of our fridge. It melted most of the plastic lining, and in putting it out I inhaled a lot of fumes…which did some serious damage. Probably permanent.
* I’m tempted to feel a bit picked on by circumstance, but it’s really just life.
Crystal Caudill
Oh, Andrew! I am so sorry to hear this. I will continue to pray that you breathe easy and your lungs will not have lasting damage. How brave if you to put the fire out. I am sure I wouldn’t know what to do beyond call 911.
Andrew Budek-Schmeisser
Crystal, thanks so much for the prayers. It was a pretty intense experience.
Shirlee Abbott
I am truly sorry about the damage to your lungs, Andrew. And the freezer. I share Crystal’s prayer for easy breathing. But somebody should fold “The freezer’s on fire!” into their youth novel. My preteen nephews would love it.
Kristen Joy Wilks
Ah, fires. We live in fire country, too. The Cascade Mountains in Washington. We are always just a little bit on edge in July, August, and September … although you do get used to the stress if it happens often enough. Then there is the terrifying element of human error. I remember the night that my husband walked into a cabin at the camp where we live and work, to find that the wall had just burst into flame. He was able to put it out himself, just barely. The fire department is 30 minutes away. Yep, a camper had put their mittens on the propane heater to dry. They were very very dry once all was said and done. Thank you Rachel for a good reminder. Copies! A good plan.
Norma Brumbaugh
I’m stuck on #7, wondering if it is correct to include writing expenses when I’m making piddly on my writing . . . so far. But I do count it because my writing is a business and it’s slowly working toward a goal and more books and articles. Actually, I took my FIRST real step into a bigger world just yesterday. Mary DeMuth skype interviewed me for one of her ReStory preconference videos. That was a first for me, and at her invitation. She asked me if I’d written a book, and then she mentioned its title in her introduction.
Shirlee Abbott
Stepping into an opportunity. Good for you!
Norma Brumbaugh
Thank you, Shirlee. If I hadn’t been at this so long, it wouldn’t be a big deal. I didn’t initiate. That is what made this special. And knowing my message has a better chance of getting out there.
David Todd
Norma: My research suggests you need to make a profit at least 2 out of 5 years (for some businesses it’s 2 out of 7 years); otherwise the IRS will deem it a hobby and deny business deductions. You can always, however, deduct costs up to revenues.
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Concerning travel, it depends on the purpose of the trip. If you drive 500 miles for a family vacation, and stumble on the plot of a book while there, you’d probably better not deduct any the trip. If you take a minor diversion to look at a site for a book, deduct only the incremental extra cost. If you fly to England to research a Victorian romance, and the trip has no other purpose, deduct it all.
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I am not a tax accountant, and you paid $0 for this advice. But, in disputes with the IRS, I have a 7-0 records.
Janet Ann Collins
In the past if I made a profit, even a small one, from my writing for a certain number of years I was able to legally deduct the cost of the Mount Hermon Christian Writers Conference from my taxes. But I have a feeling the new regulations won’t permit that in the future.
Norma Brumbaugh
Thank you for this information, David. It’s helpful. I haven’t spent a lot, but it’s good to know how to look at it . . . a-hem, how the IRS looks at it!
Jeanne Takenaka
Great suggestions, Rachel. I’m not at a point of having this kind of paperwork, yet. But, I hope to be one day. This is a copy and paste post for me.
Thanks!
Michelle Gardner
Subscriptions to professional magazines/publications. Some of your phone expenses may be eligible. New computer expense may be amortized. Office supplies such as printer paper and ink may be eligible. Please seek professional tax advice for these and other items but I have received these deductions on the past.
FrancescoDUva
Rachel Kent, thank you for your blog post.Really thank you! Awesome.
Tisha Martin
I would also keep a recent and working manuscript copy in my files! Tax time or no, computers can be fickly…I mean, fickle. 🙂