Did the 2017 Tax Bill Help or Hurt Writers?
January 5th, 2018 → 10:02 am @ Carol
In the last days of 2017, Congress passed (barely) the Tax Cut and Jobs Act introducing the most expansive tax reform in 30 years.
I followed the versions of the tax bill keeping in mind you as writers, bloggers and self-publishers.
So did the 2017 tax bill, now law, help or hurt writers and bloggers?
It depends!
Overall, writers and bloggers as small business owners were not affected greatly by this Act.They may be affected as individuals.
I’m not going to offer a detailed overview of the Act, because it’s quite extensive, but here are my initial observations:
Who it hurt:
Hobby writers and bloggers. Starting in tax year 2018, all Miscellaneous Itemized Deductions subject to the 2% of Adjusted Gross Income are eliminated. That was where hobby writers and hobby bloggers could deduct any expenses from their hobbies.
So no more deductions for hobbyists starting in 2018 (until 2025 when the Act expires).
That means if you are receiving any money in pursuit of writing or blogging (which is a form of writing), then treat your writing/blogging as a business so you can deduct the expenses! My book Business Tips and Taxes for Writers devotes an entire chapter to hobby writing (and why you don’t want to be a hobby writer or blogger). Then the rest of the book explains how to treat your writing/blogging as a business.
Large families may be hurt because no one will get exemptions for family members anymore. The personal exemption which was $3,900 per family member has been eliminated starting in 2018.
Who it helped:
Individuals who have children under the age of 17 because the child tax credit doubled form $1,000 per child to $2,000.
Individuals who do not itemize deductions. The standard deduction was increased to $24,000 for married taxpayers filing jointly, $18,000 for heads of household, and $12,000 for all other individuals
For more details read What the tax reform bill means for individuals (From the Journal of Accountancy)
Yet to be determined:
Small Business Owners
The Tax Cut and Jobs Act of 2017 included a 20% deduction on “Qualified Business Income” for sole proprietors, partnerships, S corporations. I’ve read a bit about this and think it may be a good thing for small business owners like writers and bloggers, if you qualify (that’s always the catch with tax laws!!).
Right now it looks as if small business owners will get to deduct 20% of their business income (i.e., profit) if their total taxable income is less than $157,500 for individuals or $315,000 for joint filers.
I still have a lot of reading and research to do on who is eligible for this Qualified Business Income deduction like this NY Times article, but I have all of 2018 to figure it out!
Keep up with anything else I learn about taxes for writers and bloggers by adding your name to my email list.
The 2nd edition of Business Tips and Taxes for Writers includes updated information including the Tax Cut and Jobs Act of 2017. To be released in late January 2018!
Until the new book comes out, I am selling off my inventory of the 1st edition at a drastic price reduction. $9.95 instead of $14.95. And I’ll send you a document explaining the updates in the 2nd edition. Order today while there are books left! ONLY 4 copies left!
Carol Topp, CPA
Tags: bloggers, hobby writer, IRS, tax deductions, taxes, writer
