Tax time in Americaland--veinglory

Tuesday, February 12, 2008


I will freely admit that in this post I speak from ignorance. What I know about tax could be written in the back of a stamp--so I would be interested in your thoughts.

First, there are several ways to declare royalties. In the US I think there are two main options: self-employed income or royalties. I am curious which method most people use and why. I declare royalties because I simply don't have the kind of expenses to write off to make self-employment a better deal--also I just can't be bothered with the paperwork.

Secondly, most small businesses offer an option of withholding some portion of income and paying it straight to the tax man, to avoid the worker owing tax in one lump sum. Does anyone know why most epublishers not only do not, but will not do this? Is it just because it would be a logistical nightmare or something to do with publishing as a business?

On the up side, despite writing nothing in the last six month and very little over the last year I still managed to clear just over $5000 in taxable royalties. Not too bad I guess, given that it is largely off backlist. But I really need to get off my butt and write more.

7 comments:

Shannon Stacey 4:32 PM  

Secondly, most small businesses offer an option of withholding some portion of income and paying it straight to the tax man, to avoid the worker owing tax in one lump sum. Does anyone know why most epublishers not only do not, but will not do this?

Because we're subcontractors, not employees (otherwise they'd have to pay workman's comp and FICA schtuff and all that). You can't withhold taxes from somebody who doesn't work for you. (Subs being self-employed.)

Emily Veinglory 5:05 PM  

Althought royalties are non-employee income writers are, however, not necessarily self-employed--and my tax man (who may of course be wrong) says they can withhold if they choose to....

[confused]

Amanda Young 5:20 PM  

I filed as self-employed. It was simpler for me, and that way I was abe to write off my business expenses.

Shannon Stacey 7:48 PM  

I'm definitely not a tax person. My husband is an employer, and I can tell you that withholding requires accounts and documentations and forms and forms and...more forms. So even if there was a way a contractor could withhold for his subs (which, honestly, still doesn't seem right to me), you'd probably play hell trying to find one willing to go through the hassle. Especially for several hundred authors or more.

Emily Veinglory 7:55 PM  

I can just imagine the paperwork. I save up to cover my tax, now I am finally leaving the refund zone and approaching the realm where I may owe 'the man'. [whince]

Anne Douglas 7:38 AM  

I think I might be doing my taxes oh so wrong. But at the end of the day, at this current point it makes little difference as I'm fairly much working at a minimal profit / near a loss.

Taxes here are so damn confusing. Rock on what ever candidate it was that wants to have a simple one form tax calculation option!

kirsten saell 12:04 PM  

Heh, I'm just trying to figure out my W8--as a newb, I'm not even sure if I need one, but best to be safe.

Instructions for the first line:

Enter your name. If you are a reverse transparent hybrid entity...

WTF???? We talking the invisible wolf-man, here? I thought Canadian tax law was weird.

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