Author deductions

[Dough]

I've prepared our taxes for the past several years using TurboTax, since my
wife owned her own business (Mary Kay) and the corporate tax guy wanted an
exorbitant amount for his services... BUT.....

I'm about a month away from being a published author and I don't think
there's a subcategory in TT for me! Can anyone offer insights into which
deductions I can claim?

I don't plan to designate any portion of my home as a business office (was
too big a hassle with MK), but I do use the laptop, internet, postage,
mileage and cellphone for business purposes. Would buying books to use at
public appearances constitute "inventory"? Using copies to send out for
reviews be "personal use"?

Thanks in advance for any direction anyone can give me.

 

[Mark Bole]

I've prepared our taxes for the past several years using TurboTax, since
my wife owned her own business (Mary Kay) and the corporate tax guy
wanted an exorbitant amount for his services... BUT.....

I'm about a month away from being a published author and I don't think
there's a subcategory in TT for me! Can anyone offer insights into which
deductions I can claim?

The first year of any business is when investing in professional advice
makes the most sense. The "exorbitant amount" due to the business
portion of your tax return will be a deductible business expense in the
year paid.

I don't plan to designate any portion of my home as a business office
(was too big a hassle with MK), but I do use the laptop, internet,
postage, mileage and cellphone for business purposes. Would buying books
to use at public appearances constitute "inventory"? Using copies to
send out for reviews be "personal use"?

It's not clear what your relationship to the publisher is. Unless you
are self-publishing, why would you have to buy copies of your own book?
If you are self-publishing, then whatever copies you hold for sale are
inventory, and copies you send to reviewers, I would consider
advertising expense.

As for your other expenses, whatever is ordinary and necessary for your
business is deductible. Special rules apply for depreciating listed
property such as cell phone, vehicle, and computers.

-Mark Bole

 

[Seth]

I'm about a month away from being a published author

but I do use the laptop, internet, postage,
mileage and cellphone for business purposes.

The incremental cost due to business use is deductible. Possibly, a
proportional amount of the cost (based on business vs. personal use)
is deductible.

Would buying books to use at
public appearances constitute "inventory"?

Buying books for the purpose of selling them (at a profit, presumably)
makes them inventory. If you plan to display them to get people to
buy them at bookstores, that's promotional.

Using copies to send out for reviews be "personal use"?

That would be promotional.

Promotional expenses are deductible.

Make sure the IRS will consider this a business, not a hobby. (Did
you get a cash advance from the publisher? That pretty much
guarantees it's a business.)

Seth

 

[AES]

The first year of any business is when investing in professional advice
makes the most sense. The "exorbitant amount" due to the business
portion of your tax return will be a deductible business expense in the
year paid.

And ask said professional if you can put treat the income you'll receive
each year (when it starts coming in . . .) as self-employment income and
put roughly 20% of that income (before taxes) into a single-person
tax-deferred Keogh plan, over and above any other tax-deferred or
before-tax retirement savings contributions you may be making.

(If you want to do that, of course.)

 

[Dough]

I've prepared our taxes for the past several years using TurboTax, since
my wife owned her own business (Mary Kay) and the corporate tax guy wanted
an exorbitant amount for his services... BUT.....

I'm about a month away from being a published author and I don't think
there's a subcategory in TT for me! Can anyone offer insights into which
deductions I can claim?

I don't plan to designate any portion of my home as a business office (was
too big a hassle with MK), but I do use the laptop, internet, postage,
mileage and cellphone for business purposes. Would buying books to use at
public appearances constitute "inventory"? Using copies to send out for
reviews be "personal use"?

Thanks in advance for any direction anyone can give me.

I greatly appreciate the responses I've received so far and look forward to
any others.

The corp tax guy was a Mary Kay addend, so I don't think I can use his
expertise... guess thats why Gore invented the internet! ;-)