true
TurboTax Live Assisted Basic
File 100% FREE with expert help: Get live help from tax experts, plus a final review before you file — all free.
Simple tax returns only.
See if you qualify. Must file by 3/31.
Get started
Top
  1. TurboTax /
  2. Tax Calculators & Tips /
  3. Tax Tips Guides & Videos /
  4. Jobs and Career /
  5. A Tax Cheat Sheet for Kindle eBook Self-Publishing

A Tax Cheat Sheet for Kindle eBook Self-Publishing

Updated for Tax Year 2022 • December 1, 2022 08:14 AM


OVERVIEW

You’ve done it. After months—maybe even years—of dedication and an encounter or two with writer’s block, you’ve finished your eBook. You've heard that self-publishing for Amazon’s Kindle is a breeze, so you go to their website and click “submit.” Within a day or so, your eBook is available for purchase. Just like the self-publishing process, reporting eBook profits to the IRS is just as simple if you know what to do.


Kindle eBook publisher

Make Sure You Have a Tax ID Number

Before you make your eBook available to the public, make sure you have a tax identification number. If you have a Social Security number, you’re good to go. If you don’t live in the U.S., you’ll need either a:

Your country must also have a tax treaty with the U.S. If you don’t get a Tax ID number, Amazon will typically withhold 30% of your eBook proceeds for U.S. taxes.

When It’s Time to File

Usually, Amazon won’t withhold any of your eBook’s earnings if you have a tax ID or Social Security number, so you’re personally responsible for paying what you owe to the IRS.

The IRS considers writers to be small business owners, so you report earnings on Schedule C. Take deductions from this income on Schedule C for expenses you incurred while writing your book.

Tax deductions reduce the amount of income on which you’ll owe taxes. For example, if your book earned $15,000 this year in royalties, but you spent $3,000 this year to produce it, you would only have to pay taxes on $12,000 of that income. For example:

  • $15,000 in royalties
  • Minus $500 for Internet services
  • Minus $500 in travel expenses
  • Minus $2,000 in interview expenses
  • $15,000 – $3,000 in expenses = $12,000 in book income

You may also have to pay self-employment tax on this income if you earned $400 or more after expenses.

If your eBook is a one-shot deal—in that you don’t intend to make a career out of writing—instead of using Schedule C, you can report any royalties earned on Schedule E. Report your earnings this way, if your writing isn’t an ongoing small business. Whether you use Schedule C or Schedule E, the resulting calculation is then transferred to Form 1040.

A Loss Can Offset Other Income

If, after completing Schedule C, you realize that you spent more this year  producing your book than it has earned, you likely have a business loss. You can typically deduct this loss from other sources of income—such as other work—reducing the amount you must pay taxes on.

You may have to prove to the IRS that your writing is a business, not a hobby. Your writing may be considered a business by the IRS if you:

  • Treat your writing like a business, because you expect to make money from it
  • Actively pursue deals with other publishers
  • Keep detailed records regarding what you spent and what you earned, including receipts for expenses and royalty statements

Kindle Singles Are Treated the Same as Kindle Direct Publishing eBooks

If you publish a Kindle Single, the same tax rules apply. The only difference is that under Amazon rules, Singles are shorter—no more than 30,000 words.

With TurboTax Live Full Service Self-Employed, work with a tax expert who understands independent contractors and freelancers. Your tax expert will do your taxes for you and search 500 deductions and credits so you don’t miss a thing. Backed by our Full Service Guarantee. You can also file your self-employed taxes on your own with TurboTax Self-Employed. We’ll find every industry-specific deduction you qualify for and get you every dollar you deserve.

Self-employment taxes done right

Let a tax expert do your taxes for you with Live Full Service Self-Employed.

Backed by our Full Service Guarantee

Taxes done right for freelancers and gig workers

TurboTax Self-Employed searches 500 tax deductions to get you every dollar you deserve.

Looking for more information?