© 2013 Carol Topp, CPA

This is the time of year writers suddenly realize they have to treat their passion as a business. Below are warnings and tips that can make that task a little easier.

1. Be aware: The IRS doesn’t email

The IRS does not initiate communication with taxpayers through email. They will only contact you via mail or telephone. Late last year I received an email that claimed to be from the IRS stating they were investigating my tax return. I knew it was a scam because the year wasn’t over and my tax return had not been filed yet! If you receive an email claiming to be from the IRS do not reply, click on any links, or open any attachments.

2. Keep mileage records

I dislike recording my odometer readings, so I use Google maps to calculate mileage instead. Mileage records must be kept contemporaneously so you should not rely on your memory. I record the destination and mileage in my calendar. The IRS sets the per mile rate and adjusts it annually. For 2012, writers can deduct 55.5 cents per mile.

3. Consider business use of the home deduction

Business use of the home is a valuable tax deduction for writers, but you must use a specific part of your home only for business. You cannot mix business and personal activities such as letting the kids use your office for homework. For example, my home office is used only for business, but I meet clients at my dining room table which is also used for family meals. I can claim a deduction for my home office but not for the dining room.

4. Double check tax software

“The IRS stopped the home office deduction,” an author told me. I knew that wasn’t correct. She had made a mistake in using the tax software, and it failed to include a deduction for business use of the home. If something seems incorrect about your tax preparation software, contact the software provider, or better yet, consult a professional tax preparer. If there was a mistake made on your tax return, you can amend your return up to three years.

5. Estimate cell phone and Internet use

Your cell phone and Internet fees are tax deductions, but you must separate your expenses into personal and business use. Fortunately, the IRS does not ask you to keep a log of cell phone or internet use. Use any reasonable allocation to estimate your business use. Most of my tax clients use a percentage, with 10%, 50% and 90% being the most common.
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Carol Topp, is an author and Certified Public Accountant. Her most recent book is Business Tips and Taxes for Writers. If you have a business or tax question, contact Carol at TaxesforWriters.com.