The Business of Writing – Taxes and Royalties

By Rose Marie Kern

This month we need to go over a couple of timely questions related to the money side of writing.  Amazon ebook royalties and recent changes to the IRS rules regarding 1099’s.

Recently the IRS changed its 1099 rules.  Up until now the blanket rule for any type of business transaction where money changed hands required 1099’s to be sent whenever a company paid $600 or more to anyone.  This included payouts by publishers to authors for royalties.

Of course, this meant that if someone only got $599 or less in royalties the government would only know about it if the author reported it on their taxes.

As of 2022 any entity paying out $10 or more in royalties must send the recipient a 1099.   Wow!  There will be thousands of authors now required to report smaller royalty amounts on their annual federal taxes.  This also means that indie publishing companies like Amazon, Ingram, Bookbaby, etc… will be mailing or emailing a lot more end of year documentation.

This change is specific to ROYALTIES – and does not pertain to other goods or services.

General Royalty Information

Royalty proceeds from the sale of intellectual property are considered earned income. An author/creator of work may receive extended royalties from the result of their personal services.

Royalty income is reported on Form 1099-MISC, Box 2, Royalties.

For more information go to:  About Form 1099-MISC, Miscellaneous Income | Internal Revenue Service (irs.gov)