Book royalties not always considered business income

Forum|Forum|6 years ago
May 31, 2019
2 replies
0 views

It is my understanding that money earned annually from royalties on a book written awhile ago (over 10 years ago for mine) should not be considered business or self-employment income. Here's what I found from a website dealing with these issues: "an author who wrote a book, but who is not otherwise engaged in the trade of writing for profit, would not have to pay self-employment taxes on the book's royalties." Yet, TurboTax doesn't give this option. Could you please look into this and give me an answer other than "authors are considered a business and need to report royalties as self-employment income" that I've found several times in this forum? I don't think this is accurate, but TurboTax doesn't allow for any other option. Thank you.

Best answer by mmaple

If you are no longer in the business of writer, you would report your royaly on Schedule E, and not on Schedule C. This will prevent self-employment tax from being calculated on the royalty income. If you are still in the business of writer, all royalties would be subject to self-employment tax.

According to IRS filing instructions for Schedule E -

Report on line 4 royalties from oil, gas, or mineral properties (not including operating interests); copyrights; and patents. Use a separate column (A, B, or C) for each royalty property.

If you received $10 or more in royalties during 2013, the payer should send you a Form 1099-MISC or similar statement by January 31, 2014, showing the amount you received. Report this amount on line 4.

If you are in business as a self-employed writer, inventor, artist, etc., report your royalty income and expenses on Schedule C or C-EZ.

Yulia1

Employee

Where can i report it instead?

mmapleAnswer

According to IRS filing instructions for Schedule E -

Report on line 4 royalties from oil, gas, or mineral properties (not including operating interests); copyrights; and patents. Use a separate column (A, B, or C) for each royalty property.

If you are in business as a self-employed writer, inventor, artist, etc., report your royalty income and expenses on Schedule C or C-EZ.