Those who sell erotica; do you pay taxes on it?

[HeyAll]

A moment ago I was looking at a Lit author's patreon, which has close to 700 subscribers.

It made me think about taxes.

To those who sell erotica, do you pay taxes on it?

What do you put on the form?

What do you tell your tax accountant if you have one?

 

[LAHomedog]

A moment ago I was looking at a Lit author's patreon, which has close to 700 subscribers.

It made me think about taxes.

To those who sell erotica, do you pay taxes on it?

What do you put on the form?

What do you tell your tax accountant if you have one?

Well, I don't report that, but I report my writing income. And my profession is listed as writer. I am a C-Corp and all of that goes into the professional expenses.

But it was my living.

Now it is my residuals.

Maybe an LLC? Almost no money and the same return?

 

[GinnyPPC]

A moment ago I was looking at a Lit author's patreon, which has close to 700 subscribers.

It made me think about taxes.

To those who sell erotica, do you pay taxes on it?

What do you put on the form?

What do you tell your tax accountant if you have one?

You should, it's earned income. You are self employed and should be reported on schedule C of your 1040. You can also deduct related expenses. I would keep a strict direct relationship to the writing. For example, a sex toy is probably not "research." But a purchased photo for a book cover or a subscription to some grammar editing software could be. If the expense could be only used in your writing business, then you could possibly consider it deductible. This is a more conservative approach than some would take, but do you really want the IRS digging into your life?

You can use one of the higher end versions of one of the mass market tax software packages and it should walk you through the process. List your self employed profession as an author or something generic.

Be truthful and honest in your tax return. Remember Al Capone was not busted for running booze, having people killed or other such activities, it was for tax evasion.

ps: This is assuming that you pay taxes in the United States. The general concepts probably apply elsewhere, but I have no clue what rules and forms they use.

pps: This post is worth exactly what you paid for it. I would not be taking tax advice from some random person on the internet, even if they have a license to commit acts of public accounting in one of the 50 States of the Union. If this really does pertain to your personal situation, please seek out a local authority who can fully advise you on your situation.

 

[PennameWombat]

A moment ago I was looking at a Lit author's patreon, which has close to 700 subscribers.

It made me think about taxes.

To those who sell erotica, do you pay taxes on it?

What do you put on the form?

What do you tell your tax accountant if you have one?

Patreon income should be reported and is subject to taxation. The IRS cares not what you’re selling (remember, Al Capone went to prison for tax evasion.)

As a basic rule: Patreon and Taxes. That article also covers issues around self-employment taxes due to the income and other things. That says Patreon will report your income to the IRS, but unless you hit certain thresholds they don’t have to send you the 1099 as well. It mentions Schedule C as being important for your 1040.

Per the Homedog’s comment, how you’re classified will make a difference (C Corp, LLC, etc.) Here in Australia I’m a sole proprietor, but I also have a job via a contract. Were I getting paid via Patreon (or similar) for my writing, I could run that through the Sole Propietorship, and via that deduct various expenses that apply to producing THAT portion of my income (but not the portions tied to my contract). But as an American, I also have to report all of it to the IRS (but I have DIFFERENT schedules and forms due to being an expat.)

If you have a tax accountant, you’d simply tell them you’re getting paid via royalties or similar, the source and the amount. If they don’t know, you’ll need a new one (various tax software covers this also, although I think some will layer the self-employment and such in separate editions.)

 

[RejectReality]

I've always just reported it on Other Income when I've won contests and such.

 

[TadOverdon]

Yeah, it goes on a Schedule 1, Additional Income and Adjustments to Income.

 

[MillieDynamite]

I receive 1099's from every sell source and from the authors I ghost for. These are the basis for reporting income. So, yes, I pay my share of income taxes.

 

[KeithD]

Yes, I pay taxes on it. I have an editorial service I've kept open and licensed and I also make money from publishing in the mainstream (and my erotica publisher has a mainstream publishing line and reports all of my royalties through that). All of my erotica royalties are lumped with the mainstream royalties for reporting and tax paying through the editorial service. My case is a bit more stringent than others. I worked in intelligence and still have to file annual financial statements on where my money is coming from.

 

[Ada Stuart]

A moment ago I was looking at a Lit author's patreon, which has close to 700 subscribers.

It made me think about taxes.

To those who sell erotica, do you pay taxes on it?

What do you put on the form?

What do you tell your tax accountant if you have one?

Yes, I pay taxes. But here in Norway, it depends on the amount you receive. So if you have more expenses than income, it's considered to be a hobby (no tax).
But as soon as that changes, you pay around 40% tax after subtracting the expenses. That usually removes any profit

Bottom line, writing is definitely not the easiest way to make money

 

[KeithD]

YSo if you have more expenses than income, it's considered to be a hobby (no tax).

If your expenses are greater than the income, you don't have any profit to be paying taxes on.

It's something self-publishers habitually forget to sum up when they consider what they are "making" from self-publishing. They tend not to take into account all of the expenses of doing so.

 

[Ada Stuart]

If your expenses are greater than the income, you don't have any profit to be paying taxes on.

It's something self-publishers habitually forget to sum up when they consider what they are "making" from self-publishing. They tend not to take into account all of the expenses of doing so.

So true.

I recently read a post by Derek Murphy where he revealed that in order to earn 100k from book sales, he spent 80k on ads and expenses

So I guess I need to keep the expenses at a minimum.

 

[TadOverdon]

So if you have more expenses than income, it's considered to be a hobby (no tax).

There are similar principles here.

Writing is a hobby for us, in the sense that we each make good livings and do this in our free time. Add all the money that we've made so far from writing to our annual incomes and it's not enough to move us into another tax bracket. Doesn't move the needle more than a few bucks. It needs to be reported, though.

We pay for covers but the artist is a friend who's really doing it as a learning exercise and, well, as a friend. In other words, he doesn't ask a lot, and we do favors in return. That's pretty much our only expense. Now, if you wanted to talk about what the rate-per-word works out to be...okay, them's poverty wages.

So true.

I recently read a post by Derek Murphy where he revealed that in order to earn 100k from book sales, he spent 80k on ads and expenses

Advertising?

 

[SamScribble]

The income I make from the occasional erotic story just gets added in with all the income I make from non-erotic writing. Neither my accountant nor the taxman seems to care too much about the subject matter.

 

[Ada Stuart]

Advertising?

Yes. I believe he uses ads on both Amazon and Facebook. I'm not very familiar with how to use them so I think it's better to read this article where he explains further:

https://www.creativindie.com/writing-advice-they-banned-from-reddit-ama/

It made me decide to avoid those ads for as long as possible. Sounds like money out the window, to be honest.

I've done some testing lately with giving away one free ebook and that seem to work wonders. Besides, it doesn't cost me anything.

 

[TadOverdon]

Yes. I believe he uses ads on both Amazon and Facebook. I'm not very familiar with how to use them so I think it's better to read this article where he explains further:

https://www.creativindie.com/writing-advice-they-banned-from-reddit-ama/

It made me decide to avoid those ads for as long as possible. Sounds like money out the window, to be honest.

I've done some testing lately with giving away one free ebook and that seem to work wonders. Besides, it doesn't cost me anything.

I guess if my goal were to sell hundreds of thousands of dollars worth of books, advertising would be worthwhile.

To say that I'd like to sell that much is not the same as setting a goal. LOL

 

[lovecraft68]

Amazon and Smashwords provide W-2's for your earnings on their site, Google mails theirs.

Some smaller sites pay through paypal and you'd have to report that yourself.

 

[lovecraft68]

So true.

I recently read a post by Derek Murphy where he revealed that in order to earn 100k from book sales, he spent 80k on ads and expenses

So I guess I need to keep the expenses at a minimum.

If you're self publishing your cover art should be your only expense as far as the e-books themselves go.

If you're doing a paperback you can of course write off the cost of the books you buy for yourself to sell at events or online. And formatting, editing also can be written off, but again that's paperbacks. If its straight e-books, you shouldn't be spending much.

Advertising is a waste of money for Indy erotica authors, the people who will take your money will do all of....a few tweets and FB posts, maybe mention you on their blog and website and do nothing you can't do yourself.

Additional writes offs include if you purchased a computer/lap top if you're like me and you do cons the price of the booth is a write off. I pay two girls to cos play as my characters, they're a write off as is their costumes if I want them in something specific.

If you are set up as even a DBA you can deduct a portion of your rent/mortgage as well.

Considering the average self published author isn't making much there wouldn't be anything to pay, but you still have to provide it as income, then list your expenses to wash it like you would anything else.

I set up with my accountant to pay mine quarterly so I don't get hit with as much at the end of the year.

 

[lovecraft68]

Yes. I believe he uses ads on both Amazon and Facebook. I'm not very familiar with how to use them so I think it's better to read this article where he explains further:

https://www.creativindie.com/writing-advice-they-banned-from-reddit-ama/

It made me decide to avoid those ads for as long as possible. Sounds like money out the window, to be honest.

I've done some testing lately with giving away one free ebook and that seem to work wonders. Besides, it doesn't cost me anything.

I started selling in March 2011 to date I have never given away a book. Not as a promotion for myself, and certainly not in any of Amazons programs.

Why? Because of course the thought is give them a free book and if they like it they will buy more. However. thanks to Amazon's freebie programs and Smashwords touting proudly the thousands of free books on their site, that is not always the case, in fact, I'll say the majority of the vultures will just wait for your next free one, and meanwhile they'll be gobbling the rest of the free like Pac man.

Not to mention the very site we're on right now is countless free smut stories. I love the authors here who are trying to sell, but still tweeting their lit links to free stories. That's genius right there.

End of the day people do what they think is best, but I average around a thousand a month between various sites, and again, never once have I given one away (that doesn't include sending some friends a copy, I'm talking in the market)

Make them think your stuff is worth paying for.

 

[TadOverdon]

When we first published at Smashwords we gave away a free short book for a month before pricing it at 99 cents. I think it may have helped us. And I was pretty pleased when the sales for another, higher-priced of our books passed the total number of sold-plus-giveaway copies of that one.

 

[ChloeTzang]

Yes, I declare the income and pay taxes. It's not earth shattering extra money, but the taxman will have no mercy if they catch you evading tax. Better safe than sorry.

Unless they pay cash and don't want a receipt. Different story then - but that's a bit difficult with ebooks. LOL

 

[Bramblethorn]

In Australia, tax law makes a distinction between "business" and "hobby", with hobby income not being reportable: https://www.ato.gov.au/business/sta...n-detail/online-selling---hobby-or-business-/

The distinction between the two is a bit fuzzy, and I'm no expert on tax law, but I think mine would fall under "hobby" since it's an afterthought to writing these stories for free here, and my sales are small and irregular. For somebody who's trying harder to make money out of writing, it might well be a "business".

Neither the tax form nor my accountant ask me questions at the "porn or non-porn?" level; at most they might ask what industry/occupation the money was earned in.

 

[Zeb_Carter]

Yep, its listed on my tax form and a copy of the 1099 goes with it. It's listed as royalties.