I had no frickin idea what to write about this week and several topics came to mind. At first, I was going to write this heavy topic about history and how it can teach us valuable lessons if we’d only let it do that for us. But, I didn’t want to get all maudlin on everyone. I could not bring myself to talk about the school shooting in Florida, it saddens me too greatly.
So….instead I decided to talk about how I’ve been wondering lately how many more books I really have in me and whether I can truly as I’ve said before call myself a real author.
My 10th book, Unconventional Lovers, came out on January 24th and has thankfully received almost 100% positive reviews on both Goodreads (which I affectionately call Meanreads sometimes) and Amazon. My next book is a combined project with Ali Spooner, called Free to Love, and is currently on pre-sale. That’s 11 published novels and yet I am in my third year of recorded losses as an author on my tax return.
So…guess what I did? I looked up the IRS standards for hobby versus a business. I wanted to know if I can legitimately call myself a real author. The initial search revealed something I had vaguely heard about. The IRS has a general rule of thumb regarding how long a business can claim a loss. Apparently, I would need to make a profit in 3 out of the first 5 years in business.
There are of course other factors such as:
- You carry on the activity in a businesslike manner, (Do you think all the swearing I do in blogs counts against me?);
- The time and effort you put into the activity indicate you intend to make it profitable, (Sheesh how much time can a person hang out on FB, surely I meet this)
- You depend on income from the activity for your livelihood, (Snort…not bloody likely!);
- Your losses are due to circumstances beyond your control (or are normal in the start-up phase of your type of business), (Can I claim limited talent for the craft?);
- You change your methods of operation in an attempt to improve profitability, (Recently added Instagram and Tumbler…does that count?);
- You were successful in making a profit in similar activities in the past, (Seriously? Don’t you think if I’d tried before and tanked, I’d throw myself in the fire again?);
- The activity makes a profit in some years, and how much profit it makes, and (Not even close!);
- You can expect to make a future profit from the appreciation of the assets used in the activity. (I think this means my backlog and uh, nope don’t anticipate that happening!).
Well…shit, I thought. I’m toast. Then I dug a little further and guess what? Authors and artists, in general, aren’t supposed to make money. There was a court case that established we can lose money for several years without the risk of being labeled a hobbyist. In August of 2013, in Gullion vs IRS, the Court recognized that it takes longer to achieve success in the arts than in other fields. He had seven years of losses before making a small profit in his 8th year. So….I figure I have 4 more years before I have to stop referring to myself as an author!
Of course, y’all can help me stay a real author, just buy my books so I can turn a profit before my 7-year timeframe expires! He he he…it was worth a try! But seriously, feel free to check out my books, all of them have gotten consistently positive reviews with only a few bad ones to keep it all real ya know!
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7 thoughts on “Business or Hobby?”
Interesting blog! Should we allow the Government to tell us if we are a business or a hobbyist? No, you’re an author if you want to be an author. I’m surprised to hear that you are making a loss though. I thought you were published through Affinity? Are they a vanity press? Do you pay to be published? Or have I misread?
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Oh Affinity is absolutely wonderful, they provide generous royalties, one of the best in the business. With all the travel I do to GCLS, LCLC, and Lonestar, I always have a loss. On a positive note, I get to hang with authors and readers which is fun! As long as Affinity doesn’t lose money on me, I’m good! I’m not one of the big names, so I can’t really make a living at writing!
Thank you, Annette for your blog. I always enjoy reading yours.
Well, then it would seem I have a few more years before I have to give it up. Thanks for the boost today, Annette!
Anytime! I know I was very relieved after doing the research on this!
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You definitely took a lot of worry off my mind.