he tax filing deadline is just around the corner! This year, it's April 18, 2011.  The IRS offers 10 tips for taxpayers still working on their tax returns:

  1. File Electronically IRS e-file: It’s safe. It’s easy. It’s time. IRS e-file is now the norm; not the exception.
  2. Check the Identification Numbers Carefully check identification numbers — usually Social Security numbers — for each person listed. This includes you, your spouse, dependents and persons listed in relation to claims for the Child and Dependent Care Credit or Earned Income Tax Credit. Missing, incorrect or illegible Social Security numbers can delay or reduce a tax refund.
  3. Double-Check Your Figures If you are filing a paper return, you should double-check that you have correctly figured the refund or balance due.
  4. Check the Tax Tables If you are filing using the Free File Fillable Forms or a paper return, double-check that you have used the right figure from the tax table.
  5. Sign Your Form You must sign and date your return. Both spouses must sign a joint return, even if only one had income. Anyone paid to prepare a return must also sign it.
  6. Mailing Your Return If you are mailing a return, find the correct mailing address at http://www.irs.gov.
  7. Mailing a Payment People sending a payment should make the check payable to “United States Treasury” and should enclose it with, but not attach it to, the tax return or the Form 1040-V, Payment Voucher, if used. The check should include the Social Security number of the person listed first on the return, daytime phone number, the tax year and the type of form filed.
  8. Electronic Payments Electronic payment options are convenient, safe and secure methods for paying taxes. You can authorize an electronic funds withdrawal, or use a credit or a debit card. For more information on electronic payment options, visithttp://www.irs.gov.
  9. Extension to File By the April 18th due date, you should either file a return or request an extension of time to file. Remember, the extension of time to file is not an extension of time to pay.
  10. IRS.gov Forms, publications and helpful information on a variety of tax subjects are available at http://www.irs.gov.
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This is not a joke.

You can read the entire discussion here, on Joe Konrath's blog. 

This story is going to be shared a million times this week, and I don't doubt that the mainstream media picks this one up.
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Question: Can you help me figure out how to report my royalties?Do you need to pay self-employment tax for book royalties? What is the IRS code section refering to this? Do you report your royalties on Schedule E or Schedule C?


Answer: If you are a self-employed writer, then yes, you absolutely must pay self-employment tax on your earnings. Even though the reported earnings are "royalties" they are not considered passive income if the copyright is self-produced. Self-employed writers, artists, photographers, etc, should report their income on Schedule C, subject to self employment tax. You don't have to look to the Internal Revenue Code section, it's right in IRS Publication 17 (page 89)

"You generally report royalties in Part I of Schedule E (Form 1040). However, if you hold an operating oil, gas, or mineral interest or are in business as a self-employed writer, inventor, artist, etc., report your income and expenses on Schedule C (Form 1040)." (IRS PUBLICATION 17)

Now, if you had inherited a copyright (such as from a deceased relative) then the earnings would not be subject to self employment tax.

Hope this helps
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I want to share a story about expanded book distribution.  I publish tax textbooks though CreateSpace and in 2010, I used their expanded distribution channel, which means that the books became available through LSI, too. I do a new edition every year, and I went into my CreateSpace account on January 31st to retire the old editions. The new editions will be released on March 1st.

I've contacted CreateSpace support 4 times-- by e-mail and by phone, but apparently, the customer service department can't help stop expanded distribution, even though it would probably just take a call to LSI to permanently retire the titles. I've even called LSI, and I was transferred to a dozen different people before someone finally hung up on me. Compared to Createspace, LSI's customer service is even worse.

My big problem is that LSI is still printing and releasing copies of the old edition, and I am powerless to stop it. A few of the books are still available on Amazon as new (not just through third party sellers) which means that copies are still being produced, even though I canceled expanded distribution over two weeks ago.

When I contacted CreateSpace the last time, the operator was sympathetic, but she told me that it would probably take six weeks. That's just not good-- because that means that the old edition will still be selling while the new edition is active.

I'm afraid that customers will buy the old edition by mistake, and in fact it has already happened, because I was contacted by one of my own customers about this very issue.

I'll find out for sure what is happening at the end of the month when the sales from my "expanded distribution" are reported. I think my fears will be confirmed, and I expect to have sales reported for every single title that I have retired.
CreateSpace needs to find a way to manage the expanded distribution channel better.

Since I am the Copyright holder, and I have essentially stopped my permissions for these titles, then no one should be producing any more copies. It's not like they have offset copies lying around-- LSI has to actually produce one every time there's a new order.

This little fiasco has confirmed my fears and this year, I am going to try and use both LSI and CreateSpace-- that will give me better control over my best-selling product
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CreateSpace, always ahead of the game, is now offering Kindle conversion for a low price of $69. 

Kindle-Ready File Conversion 
Broaden your readership by making your book available through the Amazon Kindle. eBooks are widely popular, especially since the launch of the Kindle. Our Kindle-Ready File Conversion service converts your trade paperback book into an eBook for the Amazon Kindle.

Price: $69.00*
* Books with complex formatting may require additional fees (e.g. mathematical formulas, tables, and heavy graphics). In rare cases we may be unable to convert your book.

I have used e-book Architects in the past with great results, but I must admit that I'm intrigued with this rock-bottom pricing. If it includes the links to for an index and the TOC, this price is a steal. But you know what they say, if it sounds too good to be true, it probably is...

I'm going to call and get the details on Monday. It sounds incredible, but, I have to say I'm skeptical that this includes basic extras like TOC links and index links. I'll bet it's just a basic conversion with no internal linking, which is something that anyone can do, honestly. I'll post the response from CreateSpace when they respond.
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A Newbies Guide to Publishing: Konrath Ebooks Sales Top 100k

Joe Konrath posts his sales numbers again; he's broken the 100,000 ebook mark. It's worth checking out. I think it's odd that the agents are ignoring Joe, but they are. I've only Konrath's name mentioned on Nathan Brandsford's blog.

I like Nathan, even though I'll probably never use an agent. He seems to take the "Jack Johnson" approach to publishing-- he's just going with the flow. And there will be a place for agents in the new publishing industry. As I've mentioned before, authors are a lazy bunch-- none of us like to deal with contracts, formatting, etc, etc. That's why we use intermediaries for that type of stuff.

Times are changing. The revolution isn't coming-- it's HERE. The rest of the publishing industry, (editors, agents, and authors) can come along, either kicking and screaming, or enjoying the ride.

Everything's changed.

By the way, everyone, I just set up my LSI account last night. I plan to publish with LSI and CS. We'll see how it affects my sales numbers.
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Question: If you use LSI with Amazon, you also have to pay a shipping cost that you don't pay with CreateSpace when a customer buys one of your books from them?


Answer: The authors that I know who use CreateSpace and LSI at the same time usually use CreateSpace for their Amazon sales, and they don't enable EDC. Then they use LSI for any sales that are outside Amazon. 


Now, CreateSpace has some benefits, and so does LSI. But both companies charge almost the same for wholesale author's copies, although CS seems to be a little bit cheaper (by pennies). The shipping charges on the authors copies seems to be about the same between both companies, with LSI being a little cheaper. 


LSI tends to have a reputation for better print quality. 


Now, I have mentioned before that I think that when authors link to their CreateSpace store, it's a mistake. The CS link is terrible, non-searchable, and buyers have to pay for shipping. As you probably know, anything that costs over 25 bucks on Amazon gets free shipping, and customers really like that. 

That's all for now. I hope that answers your question.

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Question: Do you know anyone who is making a real living using POD?

Answer: Yes! I can give you plenty of examples of writers who are making a fine living self-publishing. I'm making a very good living using POD. I have one Kindle book in print.
 
Here are some other authors that are "making it" with POD or self-publishing on the Kindle:

1. Joe Konrath
2. Zoe Winters
3. Aaron Shepard
4. Dan Poynter
5. Morris Rosenthal
6. Nick Russell (Founder of the Gypsy Journal and my co-Author on the Step By Step Guide to Self-Publishing for Profit)

I have never been published by any traditional press, although I have had articles published in mainstream magazines.

My bestselling books are technical in nature and my potential buyer market is very small (about 10,000 people take a specialized tax exam every year, and I write a study guide for it). I started with nothing, and it took four years to get where I am now.

My point is that anyone can do this, as long as they are stubborn enough and have fairly good writing skills. I say "fairly good writing skills," because what most people don't realize is that this business is 90% stubbornness and 10% talent. You have to work hard, long, and have a thick skin.

You have to accept rejection, criticism, and still get up and write every day with no guarantee of sales or success. That takes a special type of crazy. If you can manage to ignore all the voices that tell you that you are "never going to make it," then you can make a living as a writer.
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Question: I am thinking about self publishing, but I want to make sure that I am going to be successful. Are there any self-published "bestsellers" out there?


Answer: Yes! There are many examples of self-published books that go on to sell thousands and even millions of copies. Authors Dan Poynter and Aaron Shepard have both sold hundreds of thousands of copies (perhaps millions at this point) and they have been successfully self-publishing for years.


That being said, you need to realize that publishing is always a gamble, and even many traditionally published books don't make it. Make sure your book is as professional as possible, and you have a better chance at success. 
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Question: I live in the UK. I'm having trouble getting an ITIN, and CreateSpace is withholding 30% of my royalties for tax purposes. Can you tell me how to get an ITIN?

Answer: You can go to London and get the ITIN in person. This will be free because the acceptance agent will just check your ID in person.

An ITIN usually takes about 6 weeks, but can take up to 4 months. The good part is that you only have to apply once. 

Okay,  you have two choices. You can either supply an original ID (such as a passport), which will be returned to you by mail.

Or, you can send a notarized copy of your passport, if you don't want to send the original.

I suggest you read through the application very carefully, line by line, so you don't miss anything.

Then, make sure you include a very short letter with your name, address, phone number, e-mail,  and a short note saying that you are an author in the UK who is requesting the ITIN so you can sell your books in the United States. That will help, because a human being is going to process the application and the process goes faster if the IRS employee has a level of comfort.

If you send in an application,  a photocopied document is not sufficient. It must be certified/notarized, or you must send an original ID (which will be returned). I got my in-law's ITINs using a voter registration card and a birth certificate for both of them, but I sent in original documents (which were returned to me).

A passport is still the best bet, though. If you don't send the original, then you must send a notarized copy. You can see a sample of a filled out Form W-7 here. 

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