How can I write these expenses off on my taxes? Start a business?

[rhetoricalphd]

I am an author with a well paying full time job but I have three books and I schedule, pay for and fund all of my book signings. This means I buy my own books (at a discounted rate) from my publisher, pay for my hotel and travel and any other costs associated with setting up the book signing. This is costing me a big chunk of money and I am not making anything off of these signings but I want to continue to sell and market my books.

I have been thinking about creating a business name, an LLC (I guess?), in order to be able to write these expenses off under the business? Is this feasible? Does anyone else have an advice? I want to make sure I am not audited by the IRS … is it my best interest to talk to an accountant at this point?

[TBH]

Are the books in the same field as your full time job? Did they contribute to your getting the job? (I see you're a PhD. If you're an academic and the books are in your field, then yes, I'm sure they contributed to your getting the job or getting tenure.)

If so, I think you can probably write your expenses off now.

Otherwise, you can file a Schedule C to declare self-employed income (whatever small revenue you receive from the books) and deduct your travel expenses etc. But if you do the schedule C thing, you can only declare a loss on your business for I think 3 years before the IRS considers it a hobby. So eventually you have to make some money on the books or you can't deduct the expenses.

Really, it sounds like you need a good accountant.

[rhetoricalphd]

Thanks so much for your response and giving me a different perspective. Yes, these books are essential for promotion at my job but selling them and doing book signings isn't really essential to promotion … I will look into how to write this off with my accountant.

[TBH]

No prob. I'm in a kind of alt-ac field so I know a bit about how little most people make from academic books. Like, usually less than nothing once you pay for things like having the books indexed and traveling to promote them and so on.

Get an accountant who knows about royalty income, academics, etc.

[~bs]

if you already are making money and claiming the income for the book sales, you should already have a shedule c or some other type of business return. You can claim the expenses for travel, promotion, etc on your business return.

If you're making money from book royalties and you aren't claiming them already, then you are already running afoul of the irs should they decide to audit you.

[doingitallwrong]

The IRS expects that an activity engaged in for profit (a "business") will make a profit in three of the last five years. When you first start a business, you can extend the initial determination from the third year to the fifth year (and you might as well, even if you expect to make a profit in the first year). You don't necessarily have to make a profit, but you have to show that you are conducting the activity with the intention of making a profit, that you depend on the income, that you have the knowledge and/or skills to engage in that particular business, etc. If the IRS determines you are not in a for-profit endeavor, then it's considered a hobby and you can deduct expenses (if you itemize) up to the amount of the hobby income. You don't *need* a separate business name or LLC, filing a Schedule C with your personal 1040 will cover it. All of the income related to the books would then be reported on the Schedule C, of course.

http://www.irs.gov/uac/Is-Your-Hobby-a-For-Profit-Endeavor%3F

[johnt78]

You pay more taxes being self employed, not less, you must be dishonest to assume that everybody cheats.