Currently reading - Percy Jackson and the Olympians: The Battle of the Labyrinth by Rick Riodin
Last year, I did a post on keeping receipts and logs as proof of your Schedule C deductions for your writing business.
Well, there's a couple of rumors I've heard lately that definitely need to be addressed.
1) You have to make a profit 2 out of 5 years in business.
NO, you do not! There was a law to that effect decades ago. (And I do mean decades.) It is no longer in effect because studies have shown that new businesses are lucky to break even in their first five years of existence. All you have to show is an intent to make a profit. That goes back to keeping receipts, showing progress in your writing, and actively seeking publication.
2) You have to have $600 in income to claim Schedule C business deductions.
Once again, NO, you do not! The $600 rule applies to whether or not you are required to send a 1099 to your vendor. Example: If I pay my cover artist, Sierra, $600 or more in the calendar year of 2011, I will have to send her a 1099 by January 31, 2012. If I only pay her $599.99 or less in calendar year 2011, I do not.
Now, does this mean you can avoid an audit? Not if you get an IRS with a burr up his butt. And guess what? You may not claim any deductions regarding your writing and STILL GET AUDITED. So you're only hurting yourself by not taking your allowed business deductions.
As always, please consult with a qualified tax consultant for your individual circumstances.
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