Is your writing a hobby or a business?

February 21st, 2018 → 12:16 pm @ Carol

Is your writing a hobby or a business?

It depends primarily on your motivation for writing.If you are motivated by profit, changes are you are running a business. If, instead you are motivated by love or passion for writing and don;t care if you make money, then you are probably a hobby writer.

By the way, the Tax Cut and Jobs Act passed in late 2017 made being a hobby writer harder on your taxes!

Congress eliminated itemized deductions (subject to 2% of your Adjusted Gross Income) which is where most hobby expenses were deducted.

No more tax deductions for hobby expenses. That’s why you may want to consider your writing as a business if you receive any income from writing!

 

The IRS finds it difficult to gauge your motive so, here is what they use as guidelines:

The IRS has a few factors to consider:

• The time and effort you spend on writing: Spending significant amounts of time writing might imply that your writing is more than a hobby and it is a business.
• If you conduct business activities  such as doing some advertising or record keeping may mean your hobby has become a business.
• Your expertise and prior success in a similar activity makes you appear to be a business. An author with a publishing contract has a business, not a hobby.
• Your profit motive and prior history of profits may indicate a for-profit business, not a hobby.
• Other sources of income may demonstrate your writing is not your main source of income, but only a hobby.¹

Tags: author, hobby income, hobby writer, IRS, tax deduction