With the U.S. tax filing deadline just days away, what could be more opportune than some advice to writers from former tax accountant turned full-time mystery writer Jim Weikart? In the early 1990s, it was my privilege to acquire and edit two novels by the New York author, books written while his other occupation was still in full swing. Kirkus Reviews praised the books, calling the stories “richly engaging” and their tax-accountant sleuth “a truly novel hero.” If tax season has put you in the mood for some deadly tax puzzles, the novels are still available on Amazon (see Casualty Loss and Harry’s Last Tax Cut). The author has also produced a number of short stories, which have appeared in both EQMM and AHMM. Look for the latest of them, “The Samsa File,” in the September AHMM.—Janet Hutchings
The Writer’s Wife
The IRS auditor asked the writer’s wife if what the writer did was his hobby.
My heart was in my throat: This was the key as to whether the $15,000 writing loss would be allowed on the tax return. I would defend his position as a professional writer, but I hadn’t prepared the wife for this brazen direct attack and I had to sit silently hoping she wouldn’t destroy our case with one word: “Yes.” (The writer was missing, unable to face the emotional rigors of a tax audit.)
“A hobby is something you have fun doing, right?” she asked.
The IRS auditor conceded the point.
“Then, no, it’s not a hobby,” the wife said, following the comment with an ironic laugh.
The $15,000 loss was allowed, no further defense was needed from me.
Share the Pain, Share the Gain
Since something like only 4% of writers actually make money writing that leaves a lot of us out there not making a profit. Yes, “profit” is the key word to “being in business.” OMG did I just say that! Oops, wrong, bad, like an urban legend. The truth is that, “intending to make a profit” is the key phrase to “being in business.” Profit motive, not profit. Get the difference?
So there you have it: 96% of writers who, if they only choose to conduct themselves as a business, could deduct their writing failures against their day job income. Like the writer whose wife said, “No, it’s not a hobby” established the loss for her writing husband.
It’s one of the only ways to get government support for a struggling writer in America. Think of it as applying for a grant through tax loss.
Okay, maybe you do enjoy writing. The IRS rules specifically say enjoying what you are doing doesn’t disqualify it from being a business. Besides, once you’ve “enjoyed” figuring out the opening paragraph that’s going to make everybody read to the last page, which you’ve also written, isn’t there going to be a dark maze along the middle way where maybe you think of shooting yourself?
Whether you enjoy it 200% of the time (yeah, yeah), or are driven by demons who force you to write, as long as you have an intent to make a profit and conduct yourself as a business the IRS is compelled to allow your business losses.
Do you think the IRS is going to tax you when that mystery sells like a Lee Child? You bet. You’ll be paying a couple hundred grand for some nut holding the rotors on a military helicopter somewhere. So why not choose to conduct yourself as a business before your Lee Child-like book comes out? Why not make the IRS share the pain too?
Proud to be in the 96%
I retired from my New York tax firm (which served a lot of writers) recently to live in Asheville, NC, and develop my own “intent to make a profit” writing business. Editors may apply for the mystery I’m circulating, Tax Dead, so that I can establish my profit motive with their rejection letters. And I will soon have a second mystery, Lost Souls, ready for the rejection circuit.
Some years ago at a Malice Domestic, I had lunch with a fellow writer who had suffered a paralyzing spinal injury and was confined to a wheelchair. I blathered on about the business of writing as a way to save on taxes. She listened to me with a great deal of patience. When I finally shut up she looked me right in the eye and said, “Jim, there’s nothing in this world that I’d rather do than make enough money to pay taxes.”
I’ve spent much of my life advising writers on how to live less taxing lives. But in the end, that writer in a wheelchair was right. Paying more tax is a measure of your economic success. Okay, I leave you with that.
You can set up your mystery writing business correctly by searching for “IRS Definition of Profit Motive.” You’ll find ten factors beyond profit that will help you make your mystery writing a business.
Excellent post, Jim. Reality is perception. I would say paying your bills and sharing the excess indicates success. In some cases, taxes are socialized robbery, IMHO. Also IMHO Casualty Loss was excellent, as was “The Samsa File” short story. Best wishes.
Your article brings back memories for me! During an NRP audit of my tax return more than a decade ago, the IRS auditor, while questioning me about the loss on my Schedule C for my writing business, asked if I had any other “hobbies” I’d like to report! Of course, I defended myself with ardor! His snide comment was of no consequence–the loss was allowed. The experience was the inspiration for my short story “Reckoning.”