As author’s, we've all chosen a career where passion and creativity determine our ability to succeed. Writing, however, is a business like any other. Whether you're a freelancer with your first sale, or an experienced author with a multi-book contract it’s important that you understand basic income tax rules. As an example, I have had many conversations with authors about the ability to write-off expenses incurred while working in the home office. Listed below is a brief overview and things to consider.
The Home Office
The IRS loves to audit home office expenses, but for writers who live and write at home, deducting home office expenses is permissible if you strictly follow IRS guidelines. Your use of the business part of your home must be exclusive and regular, and the business part of your home must be one of the following: i) your principal place of business, or ii) a place where you meet or deal with clients or customers in the normal course of your business, or iii) a separate structure. To qualify under the exclusive use test, you must use a specific area of your home only for your writing. You do not meet the requirements of the exclusive use test if you use the area in question both for business and personal purposes.
The amount of the deduction is based on the ratio of business usage to non-business usage of your entire home or apartment.
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