This guide explains taxes for authors in clear steps, tailored to 2025 into 2026. You will learn what income to report, how to handle 1099 forms, when to pay estimated taxes, which deductions apply, and how sales tax can affect direct book sales.
Quick definition: “taxes for authors”
- What you report
- Royalties, book sales, advances, affiliate and speaking income. Report on Schedule C if self-employed as a writer. Some passive royalties go on Schedule E.
- Key forms
- 1099-MISC (royalties), 1099-NEC (contractors you pay), 1099-K (payment apps/marketplaces), Schedule C/E, Schedule SE, 1040-ES.
- Core deadlines
- Estimated tax due around Apr 15, Jun 15, Sep 15, Jan 15 of next year. File by Apr 15 unless extended.
Author income in 2025–2026
KDP and similar platforms. Amazon KDP issues Form 1099-MISC for U.S. publishers when royalties are paid for the year. Royalties for non-U.S. publishers appear on 1042-S. See KDP help for year-end tax forms and the tax questionnaire.
- KDP tax forms overview: year-end tax forms and tax interview.
Schedule C vs. Schedule E. The IRS says you generally report royalties on Schedule E. If you are in business as a self-employed writer, you report your income and expenses on Schedule C instead. That allows business deductions and may trigger self-employment tax. Source: IRS Publication 525 and IRS Royalties guidance.
Payment platforms and marketplaces. Third-party networks send Form 1099-K for business payments. For tax year 2025, the IRS set a $2,500 federal threshold for 1099-K. The threshold is scheduled to drop to $600 for tax year 2026. See IRS 1099-K updates and FAQs.
- IRS 1099-K overview: Understanding your Form 1099-K
- IRS 1099-K update (Sept 2025): transition and thresholds
Receiving a 1099-K or 1099-MISC does not decide whether income is taxable. You still classify and report based on what the money was for and whether you run a business.
Business vs hobby and setup
Are you a business? If your primary purpose is profit and you work with continuity and regularity, you are a business and use Schedule C. IRS explanation: About Schedule C. Hobby activities cannot deduct losses like a business. See IRS “not-for-profit” rules in Pub. 535 (archived mapping).
Entity choices at a glance
| Option | Pros | Cons | Notes |
|---|---|---|---|
| Sole proprietor | Simple, cheap, full deductions | Self-employment tax on net profit | Use Schedule C and Schedule SE |
| LLC (taxed as sole prop) | Liability shield under state law | Same tax as sole proprietor | May add credibility |
| S-Corp (advanced) | Split wage vs distribution | Payroll and filings required | Only with steady profits; get advice |
Paperwork you’ll send to others. If you pay an editor, designer, narrator, or other non-employee $600 or more for services, you generally must issue Form 1099-NEC by January 31. See IRS 1099-NEC FAQs and instructions.
- IRS FAQs: 1099-NEC and independent contractors
- IRS instructions: Forms 1099-MISC and 1099-NEC
Quarterly estimated taxes
If taxes are not withheld for you, make quarterly payments using Form 1040-ES. For calendar-year taxpayers, the periods and typical due dates are:
- Jan 1 to Mar 31 → due Apr 15
- Apr 1 to May 31 → due Jun 15
- Jun 1 to Aug 31 → due Sep 15
- Sep 1 to Dec 31 → due Jan 15 of the next year
See IRS estimated tax FAQs and Publication 505 for current year specifics and weekend or holiday shifts.
Safe harbor rule. To avoid underpayment penalties, most people either pay 90% of the current year tax or 100% of last year’s tax. If last year’s adjusted gross income was over $150,000, the prior-year benchmark is 110%. See Pub. 505 for the details.
Self-employment tax and retirement
When you run an author business, your net profit may be subject to self-employment tax: 12.4% for Social Security up to the annual wage base and 2.9% for Medicare. You also may owe an extra 0.9% Additional Medicare Tax over certain income levels.
- SSA announced the 2025 Social Security wage base at $174,900.
- Additional Medicare Tax thresholds: $200,000 single, $250,000 married filing jointly. IRS FAQ: Q&A.
- You can deduct half of your self-employment tax on Schedule 1. IRS Topic 554: Self-employment tax.
Retirement options for solo authors
- Solo 401(k) and SEP IRA. For 2025, elective deferrals up to $23,500 and total defined contribution limit up to $70,000, with standard catch-up extra if age 50+. See IRS retirement limits table: 2025 COLA limits.
Common deductions for authors
- Production costs: editing, cover design, formatting, ISBNs, beta reading services.
- Marketing: ads, newsletter tools, ARC copies, website and hosting (see our author websites guide).
- Research and travel: ordinary and necessary costs. See IRS rules in Publication 463 overview and IRS small business resources.
- Home office: you must use the space regularly and exclusively for your author business. The simplified method allows $5 per square foot up to 300 sq ft. See IRS home office guidance.
- Software and tools: writing apps, layout software, bookkeeping, cloud storage.
- Professional help: accountants, attorneys, book coaches.
- IRS simplified home office: $5 per sq ft up to 300
- Publication 587: Business use of home
- IRS small business guide: Publication 334
Keep records at least three years for federal tax purposes. Some situations require longer. See IRS recordkeeping guidance.
Sales tax on direct sales
If you sell print books or merch directly from your site or at events, state sales tax rules may apply. Marketplaces like Amazon usually collect and remit tax for marketplace sales under marketplace facilitator laws, but those rules do not cover sales you make on your own site or at shows.
- Marketplace collection (Amazon help): marketplace tax collection
- Economic nexus thresholds by state: Sales Tax Institute
- Marketplace facilitator laws overview: Avalara guide
Year-end checklist
- Download 1099-MISC from KDP and other platforms.
- Reconcile platform reports to bank deposits.
- Classify income by type: royalties, direct sales, speaking, affiliate.
- Collect W-9s from contractors you paid.
- Issue 1099-NEC to eligible contractors by Jan 31.
- Record inventory costs for print runs and event sales.
- Choose home office method and keep floor-plan notes.
- Verify estimated tax payments and save confirmations.
- Consider a Solo 401(k) or SEP IRA before deadlines.
- Back up receipts and ledgers; lock your year in your books.
Related resources from WriteLight Group: Self-publishing services, author website setup, eBook distribution guide.
Service spotlight: Setting up your author business assets, invoices, and storefront can save time at tax season. Our Self-Publishing Setup can support your workflow.
FAQs
Do authors pay self-employment tax on book royalties?
If you are in business as a writer, you typically report income on Schedule C and pay self-employment tax on net profit. If you are not running a business, some royalties may be Schedule E and not subject to self-employment tax. See IRS Publication 525.
How much should I set aside for taxes?
A simple starting rule is 25% to 30% of net profit to cover income and self-employment taxes. Then refine using IRS Publication 505 or with a tax pro.
What are the 1099 rules if I hire an editor or narrator?
Generally issue Form 1099-NEC for $600 or more paid for services to non-employees by January 31. See IRS 1099-NEC FAQs.
Do I need an LLC to claim author deductions?
No. Deductions depend on being in a trade or business, not on having an LLC. Many authors start as sole proprietors using Schedule C. Consider an LLC for legal reasons after you have consistent profit.
Can I claim a home office if I also have a day job?
Yes, if the space is used regularly and exclusively for your author business and it is your principal place of business for that business. See IRS Publication 587.
Last updated: October 2, 2025. This article is educational and not tax advice. Please consult a qualified tax professional for your specific situation.
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