Taxing experiences

Hello, readers –

Hey, I just realized – this is my 150th blog posting for the PNWA! Who’d have thought I’d have so much to say about getting work published, eh?

I promised to talk about what tax time is like for a working writer, and I shall, but first, I would like to address a few words to the very kind souls who have been e-mailing me lately about my memoir, A FAMILY DARKLY: LOVE, LOSS, AND THE FINAL PASSIONS OF PHILIP K. DICK, slated to come out next month.

First, I really do appreciate your support; it has been a long process, and an unusually emotionally trying one. I would hate to have any of the NF writers out there think that my experience has been typical. As my longtime readers are already aware, the Dick estate has been threatening my publishers with legal action since last July. Nine interminable, stressful months. To add to the festivities, even though I do write this blog virtually every weekday, with the specific brief of filling you in on what it is like to be a writer in the throes of bringing a book to publication, I have been advised to comment on the specifics of the case as little as possible here.

To this end, I have been quite circumspect — which has been hard, as there is much in this situation that would be of real interest to aspiring writers. I’ve written about it when I could, and as I could, which is to say: not very much, considering how much of my time and energy it occupies. This has apparently generated quite a bit of curiosity amongst my readers, which I can certainly understand. I honestly don’t mean to tantalize you, but I am operating under constraints here.

For the same reason, I have been avoiding visiting the Dick estate’s website and fan forum during these months, although nice friends do occasionally fill me in on the debate about my book that has been going on there on and off since September. However, a number of you have e-mailed me this week, to ask about a formal statement that “the family” has posted about my book. In the interests of giving a fair view of what is going on, here is the link.

It is difficult to address this statement without going too far into the specifics of the case, but because people have asked, I am going to give it a try. First, it is a little strange that the estate is defining Philip’s family as excluding my mother. My mother was married to Philip K. Dick for 8 years; they were a couple for 10, and this period happens to be when he first started writing professionally. Their marriage, in fact, lasted longer than his three subsequent marriages combined, and she is obviously the best living source for information about Philip from that period.

Second, Philip remained a dear friend of both of my parents for most of his life, and he and I were also close, so he was a major force in my life until his death when I was 15. It would have been completely impossible to write a truthful memoir about my childhood or adolescence that did not include a fairly extensive depiction of our interactions, and the suggestion that I did not have the right to write about my own life is logically absurd. And even if it were not, Philip’s daughters gave me written permission to write the story of my interactions with their father from my own perspective. Where’s the problem here?

Third — and this is important — the Dick estate has never, as it claims in this statement, provided my publisher with a list of factual errors they believe to be in my memoir. They provided me with such a list last June; this list most emphatically did not include any request that I remove any section of the book dealing with my personal interactions with Philip. They were mostly extremely minor points, including demands that I change individual words that they did not like. I made the requested changes immediately, despite the fact that the people who conveyed them to me refused to answer follow-up questions on these points or provide me with evidence of any of their contentions.

The estate’s response to this cooperative attitude has been to send my publisher a series of attacks on my character, not requests for particular changes in the book; indeed, the only book-specific objection in the threats has been to the use of a particular photograph. I have asked three times in writing for a list of additional line changes they would like to see, and the estate promised twice to provide such a list, but it has never materialized. To this day, I remain mystified as to why the Dick estate considers this book so harmful, aside from the fact that I knew Philip and I wrote it.

I hope this sets some minds at ease. I honestly do appreciate the good intentions of the people who have written in, suggesting that I just go ahead and make the changes in the book the Dick estate wants in order to remove the problem, but honestly, the situation is far from that straightforward. Believe me, I spent months last summer trying to come to some sort of reasonable accommodation that would have made everybody happy without sacrificing the truth.

Okay, on to the topic du jour. Working writers — which is to say, those of us who actually get paid for doing it — usually treat their writing as a small business, for tax purposes. This means filing a Schedule C with one’s federal tax return — a lot less intimidating than it sounds, if you keep good records of your writing-related expenses — and, if one makes enough, a schedule SE, to pay self-employment tax. You should talk over what you need to file with your tax advisor, of course, but do make sure to find one with experience in preparing artists’ tax returns, because the common wisdom on what we can and can’t claim is not necessarily always accurate.

One very common misconception is that a writer must have made money from writing in a given year, or at any rate have made more money than she expended in toner cartridges and reams of paper, in order to claim writing as a small business. This is not true, and since the rules governing this have changed fairly recently, a non-specialist tax advisor might not be aware of it. As I understand it (but again, talk to a professional before you file, please), the fine folks at the IRS now recognize that writing a book can take a long time, and that it is legitimate to regard the writing time as business time, as long as the writer approaches the project AS a business: writing on a regular schedule, engaging in professional development to increase the likelihood of commercial success (such as attending conferences and taking classes), networking with other writers (another perq of joining a writers’ group!), etc.

It may seem a little silly to file a small business return when the totality of your writing income was $15 for a 400-word article in your local community newspaper, true, but personally, I have always found it empowering to write “Writer” on the occupation line of tax forms, even when, in the interests of strict truth, it was necessary to write in the occupation that actually paid the bills that year as well.

Think of it as getting in practice for when you hit the big time. This is not just wishful thinking; it is practical advice. Some of the deductions are counterintuitive. Since the writing life is unpredictable (unless you have published a perennial seller, a book that remains in demand consistently for years), a writer often does not know early in any given year whether she will be generating writing income by the end of it. It’s a good idea to get into the habit of keeping track of your writing expenses now, so you are prepared for the day that you suddenly sell a book in December.

It also gives you good ammunition when you are negotiating with your partner(s) about setting aside dedicated writing space where you will not be disturbed. (Hey, I said I was going to be practical here.) I believe that every serious writer should have a writing studio, someplace where she can close the door on the outside world and concentrate for significant chunks of time. Yes, plenty of wonderful books have been written on computers wedged between the refrigerator and the kitchen table, but most of us work better in a committed space.

And what do you know, the tax people can help you out here: in order to deduct the costs of a home office for your business, it has to be used ONLY as a home office. No using it as a guest room for relatives, a place to dry flowers, or a place for your sweetie’s seldom-used power tools; it must be dedicated space.

I can feel some of you out there smiling already. “I’m sorry, dear,” I hear you say as you close the door gently but firmly upon your kith and kin. “The federal government says that you’re not allowed into my writing space during my writing time.”

And you thought I was kidding about how you fill out a tax form’s being empowering!

As it turns out, an awful lot of what a writer spends is tax-deductible: the percentage one pays one’s agent, for instance, is completely deductible; there’s actually a line on the Schedule C for commissions and fees. There’s also a space for legal and professional services, so if you hire a freelance editor or consult a tax advisor who specializes in artists, you can deduct that, too.

Ditto with office expenses, so make sure to save all of those receipts for paper, toner, and computer repair. Any supplies (including postage for those SASEs) you use to query agents or editors are potentially deductible, as are long-distance phone calls for the same purpose. If you decide that you would like to send your queries out on nice custom letterhead, or hand out snazzy business cards to everyone you meet at writers’ conferences (you should and you should, if you can afford it; it makes you appear more professional), save those receipts, too.

And, not to plug my boss, but what about professional memberships, such as joining the PNWA?

I’ve noticed, in both myself and my successful author friends as we’ve made the transition from being people who write to people who make a living writing, that the realization that professional development expenses are usually tax-deductible makes a subtle difference in how we choose which writers’ conferences, seminars, and retreats we attend. Frankly, I think it gets us out of the house more. The expensive ones are sometimes worth it, although it’s been my experience that cost is not necessarily a reliable indicator of the quality of a professional development experience. (Oh, the conference stories I could tell you!)

Don’t forget, too, to save receipts for those cookies you bought when your writing group met at your house, because that is a writing-related entertainment expense. So is meeting a writer friend for lunch to discuss which agents you should query. Heck, I’ve been known to dispense publishing advice over a cup of coffee and keep the receipt. Just make sure that you write on the receipt RIGHT AWAY who was there, what you talked about, and how it related to your writing. You’re not going to remember the specifics come next April.

And what about market research? Do you buy WRITER’S MARKET every year? Subscribe to POETS & WRITERS magazine? (As you should, if you are interested in entering contests; they are good at screening out disreputable ones from their lists.) What about buying books in the area in which you hope to publish? This may seem a trifle far-fetched, but listen: how are you going to know what’s selling in your area unless you read what’s coming out now? How else would you learn what the industry standard for your genre is, or find an agent who represents exactly the kind of work you write, without buying and reading a few books?

Get the idea?

Do force yourself to keep impeccable records, however. It is something of a myth that freelance writers get audited more than most people (1% of the filing population is always audited every year, regardless, so the probability of being audited is higher for everyone than most people think), but hey, better safe than sorry, eh? Grab the nearest shoebox (even if it still has shoes in it), label it “WRITING EXPENSES, 2006,” and get into the habit of tossing every relevant receipt into it as soon as the money is spent. I even track my writing hours on a weekly basis, so I can show, if necessary, hard evidence that I approach writing as my primary business.

Again, when in doubt, consult a tax professional, and it’s actually not a bad idea to have a an experienced professional walk you through the Schedule C and SE step-by-step before you file them for the first time, to make sure that you understand what is a legitimate expense and what isn’t.

But, please, don’t let doubts about your own professional status make you hesitate about whether you are really writer enough to declare your efforts as a business. It is not sales that make a real writer, but talent and industry, regardless of what insensitive friends may tell you. If you are writing regularly on specific projects, with specific markets in mind, and taking logical steps to make your work more professionally viable (such as reading a professionally-oriented writers’ blog on a regular basis for tips, for example), technically, it isn’t just a hobby.

Don’t take my word for it; the government says so, too.

Happy 150th, everybody. Keep up the good work!

– Anne Mini

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