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Writing, Publishing and Taxes!
Posted: Sunday, June 5, 2011 1:46 AM
Joined: 3/16/2011
Posts: 216

Just a question … I’m assuming that when a writer signs a contract with a publisher, he/she is treated as an independent contractor. When publishers pay advances and royalties, do they withhold federal income taxes and SS, or do they pay the writer the gross sum, send in a 1099 and let the writer deal with his/her own taxes quarterly or annually? I know that some of my regular clients (government) do take the requisite taxes out; others don’t.


Just curious about how this works in book publishing.

Danielle Bowers
Posted: Sunday, June 5, 2011 2:50 AM
Joined: 3/16/2011
Posts: 280

I've never been published, but I have worked as a contractor in other fields. Usually it's your responsibility to pay the taxes. Generally, I will put aside half of whatever I earn to put towards taxes. Half is overkill, but you never know when you'll have a really good year and go up a tax bracket.

I'm as interested as you are to see if publishing works the same way or not. It would be easier if they handled the taxes, but I have the feeling it's up to the writer.

A good accountant is worth every penny if you bring in a good chunk of change. It's amazing the ways you can write off and bury your money in certain investments to keep as much as possible.
Posted: Sunday, June 5, 2011 4:16 AM
Joined: 3/16/2011
Posts: 216

The only thing I can't seem to elude -- and no one can -- is self-employment taxes.

Those SUCK.

I was gobsmacked this year because my income went up. My accountant told me the only way to pay less was to make less.

Oh, well, there's a lot of joy for ya.

I got hit pretty hard by Obamacare, like most self-employed folks, and lost my one big deduction. But hopefully, that piece of legislation will be overturned. I just hope it's this year and that it's retroactive.
Danielle Bowers
Posted: Sunday, June 5, 2011 4:33 AM
Joined: 3/16/2011
Posts: 280

I live in Massachusetts, been dealing with MassHealth for a while now.

Your account is right to an extent. You have to figure out what the tax thresholds are and keep just below one if you can't get halfway into the next one.

When I organize the contracts, I'll use a spreadsheet to graph the potential income over the course of the fiscal year. If I start approaching the point of no return I'll either stop taking work or try to get a lot MORE work to make up for the tax hit.

Most days I wonder why I don't just go get a day job. Seriously.

The fun part is writing off anything you can plausibly write off and still stay on the sunny side of an audit.
Posted: Sunday, June 5, 2011 12:14 PM
Joined: 3/11/2011
Posts: 157

None of my publishers withhold taxes. They use a 1099 and send the report at the end of the year and you are responsible for your own taxes.

Since the US still laughingly is one of the few supposedly "first world" countries that doesn't guarantee health care, most fiction writers in the US have to keep day jobs in order to get health insurance or be covered by a spouse's or partner's insurance. My writing friends in Canada and the UK are actually living off their writing. Me, I have a day job for the health insurance. Until the country actually gets a single-payer system, you might as well figure that being an author in the US means keeping a day job for the health benefits.
Posted: Monday, June 6, 2011 6:45 AM
Joined: 3/16/2011
Posts: 216

Well, you can always buy into the union's crappy health insurance plan. United Healthcare. Ha-ha! They couldn't have chosen a crappier underwriter even if they tried. I took a look at that and said "Nothankyouverymuch."

No reputable doctor, clinic or hospital in this city accepts United -- well, except the real shady ones. My IM's insurance admin told me I'd be better off paying out of pocket, because United finds every reason not to pay.

I'll pay Blue Cross/Blue Shield a little more and get better coverage.
Jack Whitsel
Posted: Saturday, June 11, 2011 11:35 PM
Joined: 5/7/2011
Posts: 35

My publisher does not withhold taxes, and I believe that is the norm since you're not technically an employee. I believe the "writer's Guild" has health plans for authors, but I I think you have join and I don't know the cost or coverage offhand.
Posted: Sunday, June 12, 2011 3:38 AM
Joined: 3/16/2011
Posts: 216

Jack, yes it does. As does the Freelancers Union. However, Texas is a non-union state that prohibits insurance pooling (too much potential for fraud), so what I'm offered is some weird option that's basically them promoting the same plan that union state employees would get -- only I must purchase the individual policy.

It definitely costs less, but the coverage is not very good.

I'm a member of the Freelancer's Union, but don't want to join the Writer's Guild -- that's a full-fledged union. Also known as "client kryptonite" here in Texas. They won't touch union members with a barge pole.

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