Back in 2014, I self-published my first book on Amazon. I was confused by a few forms that involved tax-related issues, but in the end decided it was far simpler for me to be taxed at source (US) rather than deal with the Greek tax authorities. This decision has helped me avoid a big headache for a small income.
I was reminded of this by a guest post by Edrian Blasquino on taxes. While they aren’t the fun part of writing, they do decide how much of your royalties you keep. The good news? A few smart habits make tax season less of a mystery, but more of a money saver, no matter where you are in the world.
In a few minutes, you’ll see what to file, what to deduct, and when VAT or self-employment tax applies without accountant-speak.
Business vs. Hobby
Whether your writing is a business or a hobby changes everything. Businesses can deduct ordinary and necessary expenses; hobbies generally can’t.
If you’re treating this like a real venture with a separate bank account, records, a plan to make a profit, consistent marketing, and ongoing effort, you’re nudging the scale toward “business.”
Quick self-check:
- Do you keep books and receipts?
- Do you promote your work and track results?
- Are you trying to make a profit this year, not someday?
If you answered yes, act like a business everywhere: invoices, contracts, and a yearly review of what’s working. If you’re unsure how to set this up, get tax preparation and filing support so you can focus on writing while your system runs in the background.
US: Reporting & SE Tax
If you’re in the US and your writing is a business, you usually report on Schedule C and pay self-employment (SE) tax via Schedule SE.
SE tax covers Social Security and Medicare and is 15.3% on net earnings up to the Social Security wage base, with Medicare continuing above that. An additional 0.9% Medicare tax can apply above certain income thresholds.
It is separate from income tax, so plan for both.
What this means in practice:
Quarterly estimates. If you expect to owe $1,000 or more for the year, make estimated tax payments four times a year to avoid penalties.
Keep the 1099s. You may receive 1099-NEC or 1099-K forms from platforms, marketplaces, and payment processors. Reconcile them to your books.
Deduct like a pro. Editing, cover design, ISBNs, layout tools, software, website, email service, shipping, event fees, a slice of home office, and advertising are typical. Costs tied to marketing your book (ads, promos, ARC distribution tools, list-building services) are generally deductible when they are ordinary and necessary for your business.
Set aside a percentage. A simple rule many authors use: sweep a fixed percent of every royalty deposit into a tax sub-account so estimates don’t sting.
Two small but mighty tips:
- Use a separate business checking account.
- Close each month by tagging income and expenses and comparing them to your 1099 totals. Tiny habits, big headaches avoided.
UK: Trading Allowance & Self Assessment
If you’re in the UK, the £1,000 trading allowance can cover small amounts of casual income. Over that, register for Self Assessment and file each year.
What to focus on:
- Allowable expenses. Editing, design, subscriptions, software, website, advertising, and a fair portion of home-office costs. Record them as you go.
- Employment plus writing. Your writing income stacks on top of your other income. Watch thresholds and plan ahead so you’re not surprised in January.
- Keep it tidy. Save platform statements and invoices in monthly folders. A lightweight spreadsheet or bookkeeping tool is enough if you’re consistent.
Pro move: create a simple launch budget for editing, cover, ads, print runs, and events. You’ll spend more intentionally, and you’ll have clean records when it’s time to file.
EU: VAT & OSS for E-books
Selling digital publications such as e-books and PDFs B2C in the EU? VAT generally follows the buyer’s location, not yours. To simplify reporting across member states, many authors register for the One-Stop Shop (OSS) to file a single quarterly return instead of juggling multiple VAT accounts.
How to keep it simple:
- Pick the right scheme. Union OSS, if established in the EU. Non-Union OSS if not.
- Collect the right rate. Member States set their own VAT rates, and some use reduced rates for e-publications. Your checkout should calculate based on the customer’s country.
- Prove the location. If your cross-border B2C digital-services sales to other EU countries are at or below €10,000 for the current and previous year, keep at least one piece of location evidence. Above €10,000, keep two non-contradictory pieces, such as billing country plus IP or payment instrument.
- Save records. Store VAT and OSS documentation, including location evidence, for 10 years.
If you sell only print books through marketplaces that handle VAT for you, confirm what the platform collects and what you still need to report. Clarity here prevents double-charging or missed filings.
Record-Keeping Checklist
- Banking. Separate account for writing income and expenses.
- Receipts. Editing, cover, ISBNs, software, ads, shipping, events, travel.
- Statements. Platform dashboards, 1099-NEC or 1099-K in the US, or local equivalents.
- Sales data. Units sold, returns, and fees.
- Mileage and events. Keep logs or itineraries.
- Backups. Monthly cloud backup of books and financials.
- VAT and OSS. Store rate tables, location evidence, and filings, if applicable.
Five minutes a week beats five days in April.
Final thoughts
While the above may seem daunting, why not explore it further if it lets you keep more of your royalties this year?
Also, the information above is accurate to the best of my knowledge. However, I’m an author, not an accountant, so be sure to talk to your accountant before making any changes to your tax plans!
Edrian Blasquino
This post was based on a guest post by Edrian Blasquino. Edrian is a college instructor turned wordsmith, with a passion for both teaching and writing. With years of experience in higher education, he brings a unique perspective to his writing, crafting engaging and informative content on a variety of topics. Now, he’s excited to explore his creative side and pursue content writing as a hobby. Find him on LinkedIn I Facebook I Portfolio
Excellent post, Nicholas. I’ve handled my taxes as a business for years. This is important stuff to consider.
Sadly, yes! Thank you 🙂
Good information Nicholas. As a Canadian, we had a treaty with the US. Amazon takes no tax, I pay my taxes here in Canada and claim royalties then. 🙂
Same here – Greece has a treaty that avoids double taxation. Except, I do it the opposite way since I didn’t want to get involved with Greece’s tax authorities.