Can I Deduct Expenses for Writing a Book?

Authors who incur costs for writing and publishing a book may lower their taxable income by claiming these expenses as deductions. The ability to do so depends on whether the writing activity is considered a business for tax purposes. This involves understanding the specific rules for what can be deducted, when it can be deducted, and how to report it.

Establishing Your Activity as a Business

The ability to deduct writing-related expenses hinges on whether your writing is a business or a hobby. While income from a hobby must be reported, tax rules in effect through 2025 suspend deductions for hobby-related expenses. The Internal Revenue Service (IRS) presumes an activity is a business if it has generated a profit in at least three of the last five consecutive years.

If you do not meet this rule, you may still qualify as a business by demonstrating an intent to make a profit. The IRS assesses this intent using several factors:

• The manner in which you conduct your writing, such as keeping accurate books and maintaining a separate bank account.
• Your expertise as an author or that of your advisors, shown by consulting with editors, agents, and other professionals.
• The time and effort you invest in the activity, which should be consistent with a primary or secondary source of income.
• Your history of income and losses, as occasional profits can support a profit motive, especially if losses are normal for a startup phase.
• The expectation that assets used in the activity, such as copyrights to your books, may appreciate in value.
• Your success in carrying on other similar or dissimilar activities, particularly a track record of turning ventures profitable.
• Your financial status, as having less income from other sources can indicate a greater need for the writing to be profitable.
• The presence of personal pleasure, which is acceptable as long as the core focus remains on generating income.

Common Deductible Expenses for Authors

Once your writing activity qualifies as a business, you can deduct expenses that are “ordinary and necessary.” These costs cover the entire process from research to promotion. Common deductible expenses for authors include:

• Research costs, such as the price of books, magazine subscriptions, and access to online databases. Travel expenses for on-site research, like airfare and lodging, are also deductible.
• Vehicle expenses for business-related travel, such as meeting with agents or publishers. You can deduct the actual costs of using your car or take the standard mileage rate.
• Office supplies and equipment, from pens and paper to computers and printers. The cost of larger purchases is typically deducted over several years through depreciation, while smaller costs like software subscriptions can be deducted in the year they are paid.
• Payments for professional services, including fees paid to editors, proofreaders, cover designers, formatters, and literary agents.
• Marketing and promotion costs, such as creating and hosting a website, running online advertising, expenses for a book launch, and contest entry fees.

Many authors work from home and may be eligible for the home office deduction. To qualify, you must use a part of your home regularly and exclusively for your writing business. You can calculate this deduction using either the simplified method, a standard amount per square foot, or the actual expense method, which deducts a percentage of your actual home expenses like mortgage interest, insurance, and utilities.

Timing Your Deductions Capitalization vs Current Expense

A consideration for authors is not just what to deduct, but when. The tax code provides specific rules for “qualified creative expenses,” which are the costs of producing a creative property like a book. Under the Uniform Capitalization Rules, found in Internal Revenue Code Section 263A, authors have two choices for handling these expenses.

The first option is to deduct your creative expenses in the year you pay them. This is the most straightforward approach and provides an immediate tax benefit by offsetting any income earned during the year. This can be helpful when cash flow is a concern.

The second option is to capitalize these expenses. Under this method, the costs of creating your book are treated as an investment. Instead of being deducted at once, the costs are deducted over the period the book is reasonably expected to generate income, matching the deductions to the income stream. This approach can be advantageous if you expect your income to grow into a higher tax bracket.

This choice is made on a project-by-project basis as an accounting method election on your tax return.

Preparing Your Tax Forms and Records

Diligent recordkeeping is the foundation for filing your taxes as a business. You must maintain records to substantiate all income and expenses. This documentation includes receipts, invoices, bank statements for your dedicated business account, and detailed logs for business mileage.

The primary form for reporting your author business income and expenses is Schedule C, “Profit or Loss from Business.” The information you’ve gathered throughout the year is transferred onto this form. Part I of Schedule C is where you report your gross income from book sales and advances. Part II is where you list your expenses in their corresponding categories. The difference between your total income and total expenses determines your net profit or loss.

Filing Your Author Business Taxes

The completed Schedule C is not filed on its own; it becomes part of your annual federal income tax return, Form 1040. The net profit calculated on Schedule C is subject to both income tax and self-employment tax.

This net profit figure carries over to Schedule 1 of your Form 1040, where it is added to any other income you may have to calculate your overall income tax liability.

The profit from your author business is also used to calculate self-employment taxes on Schedule SE, “Self-Employment Tax.” This tax covers your contributions to Social Security and Medicare. The result from Schedule SE is then reported on Schedule 2 of your Form 1040 and included in your total tax liability.