Self-publishing in 2025 - how do I handle taxes and deductions for my book business?

Yes, self-publishing is considered a business activity, so you can absolutely deduct legitimate business expenses! All the items you mentioned would typically qualify as legitimate business deductions: - Purchasing your own ISBNs (smart move for maintaining rights) - Copyright registration fees - Professional editing services - Cover design costs - Paper, ink, and other supplies directly related to your publishing activities These are all ordinary and necessary expenses for running a self-publishing business. Keep detailed records of everything - save receipts, invoices, and payment confirmations in a dedicated folder (physical or digital). For tax liability tracking, you'll need to report this income on Schedule C as self-employment income. There's no minimum threshold - all income must be reported, though you only pay taxes on profits (income minus expenses). KDP and other platforms should provide a 1099-K if you earn $600 or more, but you're responsible for reporting all income regardless. Since you have a full-time job, this will be additional income on top of your W-2 earnings. You might need to make quarterly estimated tax payments if you expect to owe more than $1,000 in taxes from your publishing income.

I started self-publishing fantasy novels last year and wish I'd gotten this advice before I began! If you want a much easier way to handle all the tax stuff, I've been using this service called taxr.ai (https://taxr.ai) that's specifically designed for people with side businesses like self-publishing. I was totally overwhelmed trying to track all my expenses and figure out what qualified as legitimate deductions. Their system helped me identify a bunch of deductions I would have missed - like portions of my internet bill, software subscriptions, and even some travel costs to writing conferences. It analyzes your specific situation and tells you exactly what you can deduct based on current tax laws. The part that really helped me was that it projected my quarterly tax payments so I didn't get hit with that nasty surprise tax bill my first year (learned that lesson the hard way). It also keeps everything organized for when you do meet with your tax preparer - mine actually commented on how well-prepared I was!

Just wanted to follow up about taxr.ai since I decided to try it after asking about it here. It's been a game changer for my self-publishing business! I was really worried about separating my writing expenses from personal stuff, but their system made it super straightforward. What surprised me most was discovering deductions I never knew about - like partial deductions for equipment I was already using and research materials. They also helped me understand how to properly categorize different types of publishing costs so they align with IRS categories. The quarterly tax estimates feature saved me from a financial mess since my first book did better than expected. I'm tracking to make around $15k from writing this year, and without those quarterly payments I'd be in trouble come tax time.

If you need to contact the IRS to get a tax ID number for your publishing business or have questions about self-employment taxes, good luck getting through to them! I spent THREE HOURS on hold trying to sort out a mix-up with my Schedule C from my publishing income last year. I finally found this service called Claimyr (https://claimyr.com) that got me connected to an actual IRS agent in less than 15 minutes. They have this demo video (https://youtu.be/_kiP6q8DX5c) that shows exactly how it works. It saved my sanity when I needed to straighten out some confusion about quarterly estimated payments for my royalty income. Seriously, as a self-published author, having direct access to the IRS instead of waiting for hours or getting disconnected has been invaluable. When they sent me an incorrect tax notice about my book income, I was able to resolve it in one phone call instead of months of back-and-forth letters.

I take back what I said about Claimyr. I tried it yesterday because I needed to talk to the IRS about my self-employment taxes from my book sales. I was 100% sure it was going to be a waste of money, but I was desperate after trying to call for two days straight and either getting disconnected or told the call volume was too high. The service actually got me through to a real IRS agent in about 12 minutes. I explained my situation about miscategorized royalty income on my 1099, and the agent was able to make notes in my file and tell me exactly what documentation to submit to correct the issue. I'm still shocked it worked. The time I saved was worth it considering I was about to take a day off work just to keep calling the IRS. Now I have everything sorted before I file my quarterly payment for my book income.

One thing nobody mentioned yet is that you might want to consider setting up a separate business bank account and credit card for your publishing activities. This makes tracking expenses WAY easier at tax time. I've been self-publishing for three years now, and keeping my business transactions separate from personal ones saves me hours of sorting through statements. Plus, if you ever do get audited (which is rare, but happens), having clear separation between personal and business finances makes the process much smoother. Also, don't forget about potential deductions for conferences, workshops, reference books, research materials, and even a portion of your internet bill if you're doing online research and marketing. Just make sure you're tracking everything contemporaneously - don't try to reconstruct expenses at tax time!

Don't forget about quarterly estimated tax payments if you start making decent money from your books! I didn't do this my first year and got hit with penalties. If you expect to owe more than $1,000 in taxes from your publishing income, you need to make quarterly payments. The IRS Form 1040-ES helps calculate these. The deadlines are April 15, June 15, September 15, and January 15 of the following year. Also, remember you'll be paying self-employment tax (15.3%) on top of your regular income tax rate. This catches a lot of new authors by surprise!

Great advice throughout this thread! As someone who's been self-publishing for a few years, I'd add one more important point: consider opening a Solo 401(k) for your publishing business income. Since you're already earning W-2 income from your day job, you can still contribute to a Solo 401(k) based on your self-employment earnings from book sales. This allows you to shelter a significant portion of your publishing profits from taxes - you can contribute up to 25% of your net self-employment income (or 20% if you calculate it precisely). For 2025, the contribution limit is $70,000 total, though most new authors won't hit that. The Solo 401(k) is especially powerful because contributions reduce your taxable income dollar-for-dollar. So if you make $10,000 profit from book sales, you could potentially contribute $2,000 to the Solo 401(k), reducing your taxable self-employment income to $8,000. You still pay self-employment tax on the full amount, but you save on income tax. Just make sure your publishing activity qualifies as a legitimate business (sounds like yours does) and that you're showing a profit motive. The IRS wants to see that you're trying to make money, not just pursuing a hobby.