When can you deduct book research expenses?

January 28th, 2017 → 10:17 am @ // No Comments

LinkedIn has some great groups for writers and authors, but sometimes the information shared there about taxes can be outdated and misleading, even if well intended. Here’s an example from a group on LinkedIn.

 

The tricky part has to do with when you deduct certain things as expenses. If you do three years of research for a book—perhaps traveling to exotic places to visit research libraries—you don’t get to take those expenses in the years when they are incurred and declare a loss. They get amortized over the expected life of the book following publication and deducted from your earnings then. There are specific rules, and a good accountant will be familiar with them.

-Dick M.

 

Dick’s information is outdated. In the Tax Reform Act of 1986 Congress changed the rules to became more sane!

You can deduct research expenses in the year they occurred!

You no longer have to amortize research expenses over the life of the book (as if we know the life of any book!)

 

So be careful out there, folks! Dick was well meaning, but his information was out of date by about 27 years!!

Get advice on taxes from a currently-licensed CPA (who have to take 40 hours on continuing education every year to stay up to date!).

A good place to start is my book Business Tips and Taxes for Writers. Order here

 

Carol Topp, CPA

 

 

 

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