Tax Considerations for Authors: Royalty Income, Self-Employment Tax, Inventory, and Sales Tax

Whether traditionally-published or self-published, authors have unique tax considerations. For example, taxpayers engaged in the production and resale of property are generally subject to UNICAP for income tax purposes and are required to capitalize certain costs. However, Section 263A(h)(1) adds, "Nothing in this section shall require the capitalization of any qualified creative expense." It further explains that writers, photographers, or artists are eligible for this exception. But what happens when a taxpayer changes roles and moves from author to publisher?

Further complications include classifying royalty income which could be taxed as ordinary income subject to self-employment tax or as capital gains on Schedule D for the sales of copyrights. Perhaps the most challenging is determining when and whether sales are subject to sales tax. With almost all publications sold in multiple states and a substantial number of eBook, print books, and audiobook sales, practitioners and authors need to understand when sales are subject to sales tax.

Listen as our authoritative panel of experts explain the unique tax issues for authors and their tax advisers.

1. Types of authors
2. Business structures
3. Royalties
4. Inventory
5. Sales Tax
6. Deductions
7. Self-employment taxes and Quarterly Estimated taxes
8. Qualified Business Income

The panel will cover these and other critical issues:

• Choice of entity considerations for authors
• How royalty income is taxed
• Sales tax requirements for tangible and digital publications
• Tracking and reporting book inventory
• Report self-employment and quarterly estimated taxes on author income

Learning Objectives

After completing this course, you will be able to:

• Decide what entity types are the most appropriate for authors
• Identify different types of authors
• Determine how royalty income is taxed
• Ascertain when book sales are subject to sales tax
• Handle self-employment and quarterly estimated taxes

• Field of Study: Taxes
• Level of Knowledge: Intermediate
• Advance Preparation: None
• Teaching Method: Seminar/Lecture
• Delivery Method: Group-Internet (via computer)
• Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of attendance verification prompts displayed throughout the program
• Prerequisite: Three years+ business or public firm experience preparing complex tax forms and schedules, supervising other preparers or accountants. Specific knowledge and understanding of individual income taxation, including itemized deductions, individual income tax credits, net operating loss limitations including carrybacks and carryforwards.

Strafford Publications, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of Accountancy have final authority on the acceptance of individual courses for CPE Credits. Complaints regarding registered sponsons may be submitted to NASBA through its website: www.nasbaregistry.org.

IRS Approved Provider

Strafford is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).