As a new author, taxes might not be the first thing on your mind—but they should be! Whether you’re earning royalties, selling books directly, or offering author-related services, you need to understand your tax obligations. Here’s a breakdown of key tax considerations for authors.

Is Your Writing a Hobby or a Business?

The IRS differentiates between hobbies and businesses based on whether you intend to make a profit. If you consistently make money from book sales, freelance writing, or author-related services, you’re running a business. If you’re only writing occasionally without an intent to profit, it might be considered a hobby, meaning you can’t deduct expenses. A good rule of thumb: If you turn a profit in three out of five years, the IRS views it as a business.

When Should You Start Filing Taxes as an Author?

If you earn $400 or more from your writing in a year, you are required to report that income and may owe self-employment taxes. Even if you make less, you should still report it to stay compliant.

Do Authors Need to Pay Quarterly Taxes?

Yes—if you expect to owe $1,000 or more in taxes for the year, the IRS requires you to make estimated quarterly tax payments. These are due in April, June, September, and January. Missing these payments can result in penalties, so it's essential to stay on top of them.

Should You Incorporate Your Author Business?

Most new authors start as sole proprietors, meaning they report their writing income on their personal tax return. However, as your earnings grow, forming an LLC or S-Corp can provide liability protection and tax benefits. Consulting with a tax specialist can help determine what’s best for you.

Keeping Track of Income and Expenses with QuickBooks

One of the best ways to simplify tax season is to use QuickBooks or a similar accounting software. QuickBooks allows you to:

• Track income from book sales, speaking engagements, and freelance work.

• Categorize expenses like writing software, cover design, advertising, and travel.

• Generate profit and loss statements to understand your financial health.

• Easily calculate estimated taxes and prepare for quarterly payments.

By staying organized throughout the year, you’ll save time and reduce stress when it’s time to file your taxes.

Do You Need a Tax Specialist?

If your income is growing or you’re unsure about deductions, hiring a tax specialist can be a smart move. They can help you maximize deductions, avoid penalties, and determine the best tax structure for your writing business.

Taxes can feel overwhelming, but with the right knowledge and tools like QuickBooks, you can stay on top of your finances. Keep good records, pay estimated taxes if needed, and consider professional help when necessary. Every author’s situation is unique, so consulting a tax professional can ensure you’re meeting your tax obligations and maximizing deductions. By treating your writing like a business, you’ll save yourself some headaches and set yourself up for long-term success.