A system for keeping track of income and expenses. Writing is a business that demands the same kind of record keeping needed for any type of business. It is recommended that you set up a record system as soon as you start submitting what you write. Such a record needs to keep track of both your income and your writing-related expenditures. A simple Quicken program is easy to use and will do all the calculating by category for you. The writing-related expenditures tax deductible are such things as: postage, office supplies, UPS or messenger service to deliver manuscripts, editing services, how-to books on writing or reference books on you writing topic, computer software or programs, and almost any expenditures directly related to your writing.
If you call your writing a hobby, you can deduct your writing-related expenses, but only up to the amount you earned from your writing. On the other hand, if you call your writing a business, you can deduct all your expenses—even in excess of your income. However, even if called a business, some expenditures can only be deducted up to the amount you make. For example, if you buy a computer that costs $3,000, but you only make $2000 that year, you cannot deduct the full price of the computer. The potential problem with calling your writing a business too soon is that the IRS expects you to make a profit three out of five years if it's a business. However, even if you don't meet that benchmark, you can still call it a business if you can convince them you have worked hard to sell—it just hasn't happened yet. Showing them a professionally maintained record-keeping system (with receipts) will help to convince them you are taking this business seriously. For detailed information on record keeping and what's deductible, go to: http://rubbishtopublish.com/writing-tools/promotion-the-business/taxes-and-record-keeping-for-writers.