If You Make Income Writing, You Need to Track It

If You Make Income Writing, You Need to Track It

Many people just starting out in a home business have questions about reporting income for taxes.  For the most part, you can count on Uncle Sam wanting a cut and if you make income, you should report it.  The IRS has specific guidelines on what counts as reportable income, but generally, if you treat your writing like a business and plan to profit it from it, you will need to report your income.

The good news is, as long as you are reporting income from your writing business, you can also deduct many expenses, which reduces your taxable income.  Expenses such as office supplies, Internet access, reference books, relevant subscriptions, and even the cost of your computer can be deducted, as long as you keep your receipts so you have proof of each expense.

Unless you have dozens of private clients and a complex stream of income, you can easily keep track of everything using a simple Excel spreadsheet, or even a columned notepad. 

Keep track of each income, and don’t forget to track the fees deducted for some payments.  At the end of the year, you can take everything to an accountant or do it yourself with an inexpensive tax program.  I have been filing business tax returns for my home businesses for several years now, and always use Turbo Tax.  It is much less expensive than having an accountant, but lacks the peace of mind an accountant can offer.

The most important thing is to keep track of everything, and save receipts for it all.  If you are audited, you will not be able to deduct expenses you can’t prove you had.