Authors often ask:
“My publisher pays me royalties on the sale of my book. How do I report these on my tax return?”
If you’re a self-employed author, artist, or inventor, you report royalty income and expenses on Schedule C.
Royalty income includes:
- License fees received for use, manufacture, or sale of a patented article
- Renting fees received from patents, copyrights, and depletable assets, such as oil wells
- Author’s royalties, including advance royalties, if not a loan
- Royalties for musical compositions and works of art
Types of Royalty Income
Royalty income can come in two forms for tax reporting purposes.
Royalties received result from creative work such as writing, music and art, is considered self-employment income and is reported on Schedule C.
Royalties received through the use, manufacture, or sale of a patented article, or an investment in a mineral operation, such as a gas and oil limited partnerships are reported on Schedule E.
All royalties you receive as a writer are to be reported to the Internal Revenue Service. If you received royalties during the year totaling $10.00 or more, your publisher will send you a 1099 Misc. Form by the end of January. This form is for your records and lets you know the amount your publisher has reported to the Internal Revenue Service.
You DO NOT need to send your 1099 form with your tax return, as you do your W-2 form. It’s for your reference and tax records.
For more information on Royalties see the Department of the Treasury’s instructions for Schedule C and Schedule E
What Are Your Experiences with Reporting Income?
As an author, what experiences have you had with reporting your royalties? Feel free to leave us a comment as we would love to hear more about your experience with this topic and what other authors and writers can learn from it. Also, let us know if you found this article helpful, or if there’s similar information we can write on for future articles.