Sisters in Crime interview: Tax Tips for Writers (part 2)

July 29th, 2011 → 6:03 am @ Carol

The Sisters in Crime blog featured an interview with me on Tax Tips for Writers.

Q. Is it true that a writer (or anyone) who experiences a substantial increase in income in a single tax year can refile past taxes (up to five years back) to flatten the tax liability in the high-income year? Is that a worthwhile project?

A. Sorry, but income averaging has not been allowed since 1987, except for farmers and fishermen. Now, taxes are due on income the year in which the income was received.

On the other hand, if a business suffers a loss, the owner may choose to carry back the loss. The loss can usually be carried back two years. Recently, Congress has allowed a carry-back of a loss up to five years (it’s called an NOL, or Net Operating Loss).

Q. When should a writer hire a CPA?

A. Good question! Here are times when a CPA can really help a writer:

When you receive a letter from IRS, especially if it involves an audit or something you do not understand.
When you need help with record keeping.
When you start to make self-employment income of more than $400 a year.

Read it the entire interview here:  https://sisters-in-crime-sinc.blogspot.com/2011/07/tax-tips-for-writers-part-2-of-2-parts.html

Carol Topp, CPA