As far as self-employment taxes go, taxes for self-published authors are… pretty straightforward.
Yes, you’ll need to know how to handle a few things, including where and when you can download your Amazon KDP tax forms. But once you’ve got the basics down, it actually becomes (dare I say it?) kind of routine.
And I should know — I’ve been self-publishing my books since 2014. So let’s take a look at how self-published authors like myself pay our taxes.
Do you need to file taxes on your self-published books?
Yes, royalties from self-published books must be reported to the IRS. In fact, Amazon sends you a 1099-MISC when you make as little as $10 a year.
However, you’ll only owe taxes on that income if you’ve been paid $400 or more during the tax year.
This is the threshold all freelancers, side hustlers, and self-employed folks need to meet before we must pay taxes on our self-employed income, regardless of what line of work we’re in. And as self-published authors, we count as self-employed. After all, we don’t work for Amazon (even if it sometimes feels that way). We just publish through Amazon KDP.
How much do authors pay in taxes?
Self-employed authors have to pay at least 15.3% on income over $400.
Because we’re self-employed, we owe more on our tax bill than if we’d stuck to working a “regular” job with a W-2.
Why authors owe more taxes than people with 9-to-5s
Before you get too mad, there is a reason for this. When we work for an employer, they set aside 7.65% of our income for FICA (which pays for Social Security and Medicare). But they also pay the government an additional 7.65% of their own money.
But when we’re self-employed, we are both the employer and the employee. That means both halves of the tax bill fall to us at a combined rate of 15.3%. And there’s no withholding, so we have to pay the taxes on our own.
I hate it, too, but it’s something we all have to deal with. On the other hand, that responsibility does come with couple of upsides. For one thing, we can deduct the extra 50% we pay in self-employment tax from our income taxes.
Even more importantly, we can deduct business expenses.
How to save money on your self-publishing income
Because we technically count as a business for tax purposes, we can lower our taxable income by writing off any expenses that keep our business running.
Some examples of business expenses I’ve written off include:
- 📑 ISBNs
- 📚 Proof copies of my books
- 📷 Stock photography for my covers
- 🔖 Business cards and bookmarks
- 📧 Amazon ads and email blast services
…but the possibilities are endless.
Why kind of expenses can KDP authors write off?
So long as the expense is used to advance our business, and is both “ordinary and necessary,” we can write it off.
And don’t overthink the “necessary” part — in the IRS’s own words, “An expense does not have to be indispensable to be considered necessary.”
A quick informal test to see if it counts: Would another author immediately understand the business benefit of this purchase? If the answer is yes, it’s most likely a valid business expense!
The benefits of write-offs
Why is this so important? In short, writing off these expenses lowers my taxable income.
For privacy, I’m not going to use real numbers, but let’s assume:
- I made $20,000 in royalty payments from self-publishing my books on Amazon this year
- I spent $2,000 on business expenses
This would make my taxable income only $18,000, not the full $20,000 Amazon paid me.
That might not seem like much of a difference, but 15.3% of $20,000 is a tax bill of $3,060. Out of $18,000, it’s down to $2,448.
I don’t know about you, but I’d rather keep that $612 difference in my pocket any day.
Track your business expenses accurately
The only way to claim those expenses, though, is to know what business expenses you actually spent money on.
But remembering every payment you made during the whole year can be tricky! You can save your receipts or create a spreadsheet, and hope you remember to include every relevant purchase every time. Or you can use an app like Keeper, which automatically scans your purchases and finds write-offs — even some that you might not have thought of on your own!
How to fill in your tax information on KDP
Before you can receive your tax forms from Amazon, you’ll need to make sure your tax information is filled out correctly.
This is so vital that Amazon won’t let you self-publish a book on KDP until you’ve completed this step!
How do you give Amazon you tax information?
To enter your tax information on KDP, you’ll need to complete a short “tax interview.” This is a series of questions to determine your tax status, and includes:
- Your name
- Your tax classification (like sole proprietor or S corp)
- Your address
- Your Social Security Number (SSN), Employer Identification Number (EIN), or Individual Tax Identification Number (ITIN)
What tax form will you get from KDP?
Once that’s complete, Amazon will know exactly what forms to send you, such as:
- A 1099-MISC (this is what most authors will receive)
- A 1042-S (for international authors who live in a country that has a tax treaty with the US)
There are also a few cases where individual publishers don’t get tax documents from Amazon at all, such as tax-exempt organizations and LLCs taxed as S corps (but more on that later!)
How do you choose how you’ll receive your form?
The last thing you should do is head to your tax dashboard and click “Go paperless.”
This will allow you to download your KDP tax forms as soon as they’re ready — you won’t have to wait up to two weeks for them to arrive in the mail.
Do authors outside the US still need to complete the tax interview?
Yes. Amazon requires all self-published authors to complete the tax interview to sell through the US KDP store.
For authors outside of the US, you’ll need to register for a US Tax Identification Number (TIN) using IRS form W-7. It can take up to seven weeks before your TIN is registered — 11 weeks during peak season. So to avoid delays, get started on that well before your first book’s release date.
Once you’ve got your ITIN, Amazon will determine what, if any, tax withholdings should apply to your account.
After it’s all set up, you’ll be able to set your tax forms to “paperless” and download them from your KDP dashboard.
How to download your Amazon KDP tax forms
This is probably the easiest part of paying taxes as a self-published author!
Ready? Here goes:
- Log into your KDP account
- Go to the “Tax dashboard” under My Account
- Click the “Find Forms” button on the right hand side of the screen
From there, you can download your 1099-MISC, assuming you were paid more than $10 the previous year. (Remember, Amazon doesn’t file 1099-MISCs if you earned less than that!)
If you haven’t set your account to “paperless,” Amazon will issue your 1099-MISC via old-fashioned snail mail. This can take up to two weeks to arrive.
All forms will be either sent out or made available for download by January 31 for US publishers, and by March 15 for international publishers.
Do you need an LLC to self-publish books?
Some authors mistakenly think you need to register an LLC before you can claim tax write-offs or even get your tax forms from Amazon. This isn’t true.
“LLCs are fabulous legal vehicles to protect your assets (ask a lawyer) but there are absolutely no tax benefits at all,” says Wendy Barlin, an author, speaker, and tax strategist.
At least, not unless you set yourself up as an S corp!
S corps are a tax classification you can have as an LLC, and that can add tax benefits. But only once you reach a certain income threshold. Barlin advises her clients that their income should exceed $50,000. “Then it is time to talk to a tax advisor about setting up a corporation to minimize your income taxes.”
But not before, which means that most self-publishing authors just starting out will have a long way to go before they need to weigh those pros and cons.
Do authors with LLCs get Amazon tax forms?
That depends on how your LLC is treated for tax purposes:
- If you have an LLC that’s still taxed as a sole proprietor, you’ll get a 1099 form. (LLCs are treated as sole proprietors by default)
- Iif you have an LLC that you’ve registered as an S corp, you won’t get a 1099
“Amazon and booksellers do not send 1099s to corporate entities,” Barlin explained.
You’ll still need to report that income, of course! “Your responsibility as an author and a taxpayer is to declare all your earned income, irrespective of forms received,” Barlin said.
Tax forms from other self-publishing platforms
Of course, there are more options for self-publishers than just selling through Amazon KDP.
Instead of selling exclusively through Amazon, some authors decide to “go wide” with their books. This means we’re making our ebooks available through multiple retailers.
I sell wide, but I am certainly not going to tell you how to sell your books — there are benefits and downsides of publishing your book wide, and every author needs to make that choice for themselves.
However, this does mean I get more 1099 forms come tax time than if I sold exclusively through Amazon.
Tax forms to expect when you sell wide
When you publish wide, you’ll get a 1099 from every US-based company you upload your books to, but not necessarily every store the books show up in. This is because some companies, like Draft2Digital, distribute your books to many different stores on your behalf.
In that case, you’ll only receive a 1099 from Draft2Digital, not every store they’ll get your book into, since Draft2Digital is the one sending you the money!
Selling through non-US sites
Occasionally, one of the retailers we’ll work with won’t be based in the US, such as Kobo. In those cases, you won’t receive 1099s — or any tax forms, for that matter.
But just because you don’t get the tax form, don’t think that gets you off the hook on reporting it or paying tax on that income.
Remember, all income needs to be reported to the IRS, regardless of how you receive it or where it comes from.
In this case, you’ll need to track how much you receive from each non-US source and add it onto the appropriate form come tax time.
How to file your self-publishing taxes
The process of filing self-employment taxes is pretty much the same no matter what industry you’re in. Us authors are no different. It’s a little more complex than if you work a W-2 job, but once you get used to it, it won’t be that scary!
There are three main steps to remember when you file your tax return.
Step #1: Gather your 1099s and calculate your total income on Schedule C
Form Schedule C is where you calculate your business’s total taxable income.
The first thing you’ll need is to know the total amount you made off writing last year. Add up all the amounts on your 1099s, and also remember to add in any writing income you didn’t get a 1099 for!
Next, you’ll account for all those juicy business write-offs we talked about earlier.
You’ll need to divide these expenses into categories. Authors will frequently have expenses listed under:
This is also where you can take out your home office deduction, if applicable.
Your income minus your business expenses gets you the total taxable amount for your self-publishing income.
What to do if you have multiple streams of income
If your other types of income are also writing (such as freelance writing for companies and magazines), simply add your combined freelance and self-publishing income into one Schedule C.
But sometimes writers have writing-adjacent side hustles that we use to support our writing, such as:
- Social media payouts
- Freelance cover design
- Freelance editing
…or even something completely unrelated, like dog walking. If that’s you, you’ll need to fill out a separate Schedule C for each type of business you run!
Step #2: Calculate your taxes on Schedule SE
Once you know your total taxable income, it’s time to fill out your Schedule SE. Schedule SE is where you determine how much self-employment tax (SE) you need to pay.
I found the Schedule SE a little intimidating at first, but once you get used to it, it’s not so bad. In essence, you take the taxable income from your Schedule Cs, try not to cry as you do a few lines of math, and then enter the result on the final box of Part 1.
Once you have that number, you can drop it onto your 1040 and proceed with the rest of your taxes as normal. Congratulations, you’re almost done!
There’s just one last thing self-published authors need to know about.
Step #3: Pay your quarterly taxes
If you expect to owe $1,000 or more in taxes when you file next year, you’ll need to file quarterly taxes this year.
It can be hard to know how much to set aside for quarterly taxes, but you can make it easier by plugging just a few simple numbers into Keeper’s estimated quarterly tax calculator.
The filing deadlines for quarterly taxes are:
- April 15th
- June 15th
- September 15th
- January 15th (of the next year!)
And that is the last piece of your KDP taxes puzzle.
As you can see, it’s definitely more effort than if we worked a traditional 9-to-5 job — but since when are we self-publishers afraid of rolling up our sleeves and tackling things ourselves? If I can do this, you can, too. Good luck!
Over 1M freelancers trust Keeper with their taxes
Over 1M freelancers trust Keeper with their taxes
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At Keeper, we’re on a mission to help people overcome the complexity of taxes. We’ve provided this information for educational purposes, and it does not constitute tax, legal, or accounting advice. If you would like a tax expert to clarify it for you, feel free to sign up for Keeper. You may also email firstname.lastname@example.org with your questions.