Tuesday, March 12, 2013
Two-Cent Tuesday: Dollars & Sense
Anyway, last month I finally got around to doing my income tax returns. I could have done them sooner but I had to wait for Amazon to mail three different 1099-MISC forms for my book sales. One is for Amazon in the US, one for International, and one is for CreateSpace (owned by Amazon) for paperbacks. I actually like Smashwords because they do it online so it's much quicker. Really Amazon you're a huge conglomerate why can't you do that?
I've seen some well-meaning advice bandied about that you should set up an LLC (limited liability corporation--like a self-proprietorship only with a corporation's liability protections) for your writing. But in doing my taxes, I saw a good reason why not: small business taxes can hit you pretty hard.
At first when I was putting in my 1099s I put them under Schedule C for small business income. My refund then went down about $300 in short order. This didn't seem right to me so I went to the help guide that came with my H&R Block Tax Cut software. What it said is that if writing is not your primary source of income then don't use Schedule C for small businesses. Instead you want to use Schedule E for miscellaneous income.
Now since I only made $550 from writing, it obviously was not my primary source of income. So I changed it to put my 1099s on Schedule E and my return went down by only about $100 instead. So that's a $200 savings!
Which is why unless your writing is going to be your primary source of income and you're making tens of thousands of dollars, you don't want to create a LLC. Unless you want to give the government a few hundred bucks when you don't have to. Maybe you're just generous that way.
Tomorrow's trivia question posts really early (for those of you west of the Mississippi it'll be posting today!) and will only be difficult if you've not read my book or paid attention to this blog in about a year...yeah, you guys are fucked...