taxes for aviation writer

Discussion in 'Lessons Learned' started by confused, Nov 17, 2016.

  1. confused

    confused Guest

    Question for anybody who has sold articles to magazines or knows the relevant tax law.

    Say I write an article or articles about work I've done on my experimental airplane and get paid for it. Not much, a few hundred dollars each time. The publisher sends me a 1099. I'm supposed to report that on Schedule C. What can I deduct against that so I don't owe taxes on it? Any expenses related to the plane (like hangar rent, flying time, maintenance expenses, fuel, insurance, etc.)? Those are a lot more than I got paid. Or just the expenses directly related to the work I'm writing about (still more than the income)? If the latter, what if I incurred those expenses the year before I actually got paid?

    I've read all about taxes and hobby businesses, but nothing I've read seems to cover this. I'm not looking to show a loss and reduce the taxable income from my day job (though it would be nice, I suppose, if legal), just to avoid paying taxes on the writing income. But if I deduct, say, several thousand of hangar rent, etc., against a couple hundred of income and show that as a loss, that doesn't sound reasonable (especially if I do it for several years) and would likely trigger an audit... there doesn't seem to be a "if less than zero, enter zero" option as there is in other places in tax forms.
     
  2. wanttaja

    wanttaja Pattern Altitude

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    Probably won't be able to avoid an audit. Kinda like a home office.

    I've deducted very little over the years. The key items have been those related to the "writing business". Maybe I'm too conservative, but I've never been audited. Having regular royalties, vs. random article payments, probably helps, too. I don't try to deduct for a home office, either.

    I did deduct half the cost of buying my first airplane, but I still showed a profit that year ten times more than the amount deducted.

    Ron Wanttaja
     
  3. TutorMonster

    TutorMonster Filing Flight Plan

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    I buy a new computer every few years an amortize it over a few years. No way to argue that one, IRS.

    Sent from my SM-G930P using Tapatalk
     
  4. unsafervguy

    unsafervguy Line Up and Wait

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    i do not understand not deducting a home office. it is not an immediate audit. i have been deducting my office for years and have never had it questioned. all it takes to prove it to the IRS is a picture that shows it is an office, not a bedroom with a desk. as for aircraft expenses that can be written off I would consult a tax accountant that has knowledge of the literary field.

    bob
     
  5. coloradobluesky

    coloradobluesky Pattern Altitude

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    If you deduct for home office, you may have to pay up when you sell the house. I had a friend that ran into that one.
     
  6. DaleB

    DaleB Pattern Altitude

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    You can deduct any expenses that you actually incurred writing the article. If you regularly write articles, you could probably deduct things like AOPA/EAA membership, magazine subscriptions, etc. Maybe part of the cost of the computer you use for writing. Just be ready to defend any deductions if you get audited, and have documentation to back them up.

    Pay taxes and you lose a few percent of your income from writing.
    Get audited and denied, lose that PLUS interest and penalties.

    Given those facts, you get to choose the level of risk you're willing to assume on deductions that aren't slam-dunks. If you have someone else do your taxes, ask them what they think. I wrote a Dummies book and got a pretty nice check for tat -- didn't deduct anything, even though I probably could have justified a little here and there.
     
  7. confused

    confused Guest

    If you claim depreciation, yes, it will affect the basis of the house and you may owe capital gains. But if you only claim the percentage of home expenses, i.e. utilities, mortgage interest, etc., then no.

    In this case the amounts aren't enough to bother with the home office deduction, a couple of month's hangar rent, or the parts I bought that I wrote about, would cover it. I just don't want to run afoul of the IRS for a "business that consistently loses money" for multiple years.

    The other issue I don't fully understand is that due to the timeline of the magazine business, all expenses directly related to the article were incurred in the year(s) prior to the one in which I got paid.
     
  8. James331

    James331 Touchdown! Greaser!

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    Too bad its not certified plane/CPL pilot.

    Think the FAA definition, is if the flight was essential to the product/service, in your case it was, not sure if the IRS knows or cares, thinking your issue may lay with the FAA on this one.
     
  9. Sac Arrow

    Sac Arrow Touchdown! Greaser!

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    You could probably deduct certain aviation expenses on a cost-per-flight basis as travel expenses, if you could legitimately argue (or document, rather) that travel is required for your writing 'business.' Yes you can deduct direct writing expenses such as supplies, marketing and equipment depreciation. Personally, unless you are pulling in on the order of ten or more thousand dollars a year in royalty income, I think it's hardly worth the accounting hassle.
     
  10. confused

    confused Guest

    No issue of getting paid for flights; all the articles are about maintenance and working on the plane (experimental), so no FAA issues. But the cost of parts, and of generally owning the plane, may be deductible.
     
  11. airheadpenguin

    airheadpenguin Pre-takeoff checklist

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    That's like every startup in the world until they either make it big or get bought, Tesla's in this category
     
  12. DaleB

    DaleB Pattern Altitude

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    Ummmmmmm, sorry but no. Not at all. I've personally run two startups that showed profits within the first few years while not "making it big" OR getting bought. I can point out seveal hundred others within a mile or two of my house.
     
  13. airheadpenguin

    airheadpenguin Pre-takeoff checklist

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    My experience has been 2-3 years out that happens, year 1-2 is tough to show a meaningful profit. Glad you've had a different experience since positive cashflow has always been the scary thing about startups
     
  14. DaleB

    DaleB Pattern Altitude

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    Yes, exactly. The first couple of years are tough; after that you should be profitable or close to it. Both times I did it the business had to be entirely bootstrapped... there was zero startup capital, no loans, fly or fall. Nothing will get you focused on the business quite like not having a fallback plan.
     
  15. jmp470

    jmp470 Line Up and Wait

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    FYI, Audits suck!!! Not only was I audited on
    My 2014 taxes, I had to amend my 2015 taxes and pay for both years!!! Ouch!!! Luckily, and surprisingly, the IRS did not penalize me at all. But, I had to pay back interest.

    Now, I'm guessing my 2015 taxes will be audited and I will have to pay more taxes in 2016.

    Oh well! Moral of the story, write off as much as you can, legally, and be prepared for an audit. It was actually painless. Just sucked that I had to pay more money. I was writing off a dual language program as an education expense, which is completely legal, however, my wife's business didn't generate enough money, so they classified her as a stay at home spouse. In which case, you cannot write off the education program!!!
     
  16. Art VanDelay

    Art VanDelay Pattern Altitude

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    Is there any money to be made as an aviation writer ?
     
  17. denverpilot

    denverpilot Taxi to Parking

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    [​IMG]
     
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  18. wanttaja

    wanttaja Pattern Altitude

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    Every dime you make is a dime you didn't have before.

    I'm happy if my annual writing income covers the cost of owning my airplane, even if I don't write it off. Most years it does.

    Ron Wanttaja
     
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