How much do self published eBook authors have to pay in taxes?

My answer to How much do self published eBook authors have to pay in taxes?

Answer by Wray Rives:

Since you say self published, I am going to assume you are receiving a percentage of the sales of your books and this is not a situation where you have sold the rights to your books and are receiving royalties.  Even if you do receive “royalties” on your published works, it is probably still self employment income to you as I can’t think of circumstances where royalties for your original works would not be self employment income.  If you wrote one book and never intend to publish another or wrote the book for an employer then a royalty is a royalty, otherwise be careful that some may try to tell you that because royalties paid to a writer is called “royalties” it is reported on Schedule E and not on Schedule C, as this is just not the case.

Your income is considered self employment income.  You pay the same progressive income tax rate as any other taxpayer does, the only difference is on top of income tax, you also pay self employment tax equal to 15.3% of your net profits from writing and selling books.  This self employment tax is where you are getting the concept that you pay higher taxes than say someone with a W2 job.  The W2 employee is having Social Security and Medicare tax withtheld from a paycheck at the rate of 7.65% on the first $118,500 of gross pay.

The key term for you is net profits not gross pay, because you get to deduct reasonable and necessary business expenses incurred in your writing/publishing business

So for a writer/publisher, you should consider things like laptop that you use exclusively or at least primarily for writing and publishing.  Do you have a space in your home that you use exclusively for writing and publishing work, if so you might benefit from a home office deduction.  Other things like expenses to promote or research a book could all be a possible tax deduction.

The net profit after deducting expenses from your gross receipts is what your self employment tax is calculated on and is also the number that gets added to any other income to determine your income subject to income tax, using the same tax tables everyone else uses.

How much do self published eBook authors have to pay in taxes?