Ah, September. We’re closing in on the end of the year, with less than four months to go. Are you on track with your yearly goals? What are your revised goals for the last tax quarter of the year?
Third-quarter estimated tax payments are due into the IRS by September 17th. (Yes, technically September is fourth quarter, by tax year. I understand it’s the end of the third quarter by mathematical ratios. The IRS doesn’t care about that; third quarter for taxes and accounting ends on August 31.)
For those of you who are or want to become full-time authors, and even those of you who don’t, now is a good time to put down your author hat, pick up your business manager hat, and answer a few questions for yourself.
1. What is your total word count for the last 9 months? For each month? Week? Day?
2. What is your average word count per month, week, and day?
3. How many hours did it take you to write the last story/novel? (Hours actually spent writing, not calendar time from start to finish)
4. What was your average words per (actually writing) hour?
5. What time of the day is the most productive for you to write?
6. Was that increase in productivity at home or away?
7. What other factors led to it?
8. How many hours a day do you spend on writing business other than actual writing (including research, billing, marketing, etc)?
If you haven’t been keeping track, then how do you know what will help you, what works best for you, and just how good you can be when everything is awesome? How can you plan a production schedule if you don’t know what it takes to produce your product? If your method of creating new work is to sit down at a keyboard, sometimes, and hope that a novel shoots out of your fingers… hope is not a business plan. Keep your day job a while longer, and get ready to quantify your creative side.
If you have been keeping track, or you can pull some rough numbers off files and blog posts, now is a good idea to take a look at the story that the numbers tell. Are you more productive in the morning or evening? When you have 4-hour blocks to write, or when you have an hour to squeeze in? When you’re at home or at the coffee shop? (Or, in one writer’s case, in the van at the grocery store’s parking lot, getting “one last thing I forgot” and really finishing a chapter without the kids interrupting?) Do you write better with music or without? Does it go faster if you can write every day for multiple days in a row? How often did you lose a week to being sick, or other emergencies?
This isn’t about forcing you into a rigid schedule. This is about helping you realize what you need to be at your best, and about how much time it really will take you if you’re trying to plan out the next book, the next series, the next year. It’s about “The cover artist needs at least a month, so between the beta readers, the copyeditor, the cover artist, etc. I’m looking at a release roughly in this month… and I can reserve a slot roughly by then, because I’ll know if I’m on track, which means the final draft won’t have to sit waiting for ‘next available’ slot with anyone else.”
Writing is a very personal thing, that takes place a lot in solitude and in our own heads. This means that the immediate moments, and the low points and high points, tend to overwhelm all the day-to-day, and the story we tell ourselves of how we’re doing and what works best for ourselves… may not actually match reality. This is why I like numbers: they take all of the crisis-of-the-moments and the unique cases and let you step back and get a bigger, broader picture. They also let you focus on things you can change, and do better – because what you measure, you can alter.
Sometimes they say things we don’t want to hear, like “You’ve only averaged one day a week at the gym in the last 3 weeks. This is why you’re not getting any better. It doesn’t matter what the reason is this time, last time, the time before… you’re not going to get better until you go three times a week.”
Sometimes they say things that we really didn’t expect, like “While you feel more productive writing at the coffee shop, you really are only pulling the same numbers as you do at home, and have the driving time and the extra cost of lattes.”
Sometimes just tracking forces a change in habits, like “If I start writing with my first cuppa, I can get 1,000 words in. If I check the news first, it’s hit or miss if I write anything at all… oh, look, I realized this and now I’m skipping news in the morning, because otherwise I have to record a big fat zero in my daily word count…”
And sometimes it’s simple little things like “My writing speed doubles when I get to the scenes I’m really excited about. Huh. Maybe I ought to find or make something about each scene that’s cool and interesting, or skip ahead… because if they’re boring me to write, are they going to be just as boring to read?”
You’ve got less than four months to finish out 2018. What are your goals and plans? What are you going to track?
…and if you want a break from the mundanity and paperwork, I recommend Tales of the Minivandians. Because life with cubicles, car seats, and battles with plumbing is always better when told with high humour and high fantasy, and a little bit of magic!
Great article, but do you really have to do your taxes four times a year regardless of occupation?
Only if your are self-employed, retired, a contractor, or otherwise have income but do not have a large enough employer interfacing between you and the IRS.
If you own a business, or are self-employed and your income is above the hobbyist threshold, then the IRS demands quarterly estimates of income, and payment on the estimated taxes owed. The final accounting at fiscal year-end (usually, but not always Dec 31) is required to be exact instead of estimates, and that tax payment will reflect the adjustment between what you’ve paid in the first three quarters and the actual yearly total.
Lots of writers who’ve gotten large advances or had a book go viral get into hot water with the IRS, because they are unaware that the rules are different, and 1.) the IRS will apply a retroactive penalty on later quarterly filings when their yearly filing shows they passed the quarterly threshold. They also don’t realize that 2.) businesses pay as much in taxes on each employee as the employee does themselves (this isn’t shown on the paycheck), so when self-employed, twice the amount of social Security & other taxes are due to the government.
And 3.) when you get royalty and other non-paycheck income, the various income taxes are not withheld automatically like they are in a paycheck. So when they file taxes yearly as if they were an employee, they get hit with a huge tax bill and tax penalties on top of that, for late quarterly payments. (This also happens to people whose companies pay them as contractors, a move many companies did to avoid some of the extremely onerous penalties under Obamacare employee thresholds.)
Things like this, combined with confirmed reports in the last presidential administration that several of the president’s advisors and others high in the government hadn’t paid their taxes for years with no penalty whatsoever to them, have helped contribute to the… interesting election results of the last four years, at local, congressional, and presidential levels.
I had been working with one author for quite a while when I discovered that she had been co-mingling her earnings, her husband’s day job salary, and his pay for part time work all into one household account. Try as I might I could not convince her that simply keeping track herself on a spreadsheet was not sufficient and would come back eventually to bite her.
I will no longer work with that author for any number of reasons, but one of them is her refusal to treat her writing as a business.
“she had been co-mingling her earnings, her husband’s day job salary, and his pay for part time work all into one household account.”
Uncle Lar, for estimated tax requirements, she probably has to do exactly that. As a handy example, there’s the snelson134 household. I work at a regular job at a salary plus bonuses. My wife has income from investments her father left her. Some years, her income will rise to the level that our accountant has to make quarterly estimated tax payments based on our total household income. We used to have to do it more often before I got my bonuses paid as an “extra” salary payment which withheld SS, income tax, and various “pre-tax” deductions like 401k before I saw it.
Point being, folks, it’s going to depend on how you file taxes as a household. Get an accountant to go through this kind of stuff.
The thing is, I checked and she did not make any estimated payments. Instead they increased deductions on his day job salary to avoid getting in trouble end of year. Point being, for both of them, her writing and his side jobs were treated as hobbies, not real income producing jobs.
I am neither an accountant nor a tax lawyer; for real advice, consult one of those.
But the key is that you need to hit either 90% of this years’ taxes (including Social Security and Medicare taxes, of which, as was said above, self-employment means you pay both yours and the employer’s half), or 100% of last years’ (to within $1000) or you get hit with penalties. Note that this also means that if you had no tax liability last year, then you don’t need to file quarterlies this year.
If you expect to do really well (I believe it’s over $150,000) then the 100% becomes 110% for the safe harbor,
For math-inclined people, the easiest way to understand it might well be to look at the IRS form that computes the amount you owe. It’s online at https://www.irs.gov/pub/irs-pdf/f2210.pdf (and the instructions for the form are also online, but two URLs would trigger things).
And note that the penalties are figured for each quarter, so even if you end the year hitting the right total, you can get hit by penalties for early quarters if you underpaid early and then caught up. To quote the IRS (from Publication 505 — the long instructions on estimated tax:
“You will owe a penalty for any 2017 payment period for which your estimated tax payment plus your withholding for the period and overpayments applied from previous periods was less than the smaller of:
22.5% of your 2017 tax, or
25% of your 2016 tax. (Your 2016 tax return must cover a 12-month period.)”
(They still need to update it for the 2018 year, but the text will be the same with the years increased by 1.)”
It’s my understanding that those penalties can be challenged if the increased income is the result of an unexpected windfall or a significant change in the tax code. Given the major changes for 2018 I suspect the waving of most penalties this coming tax season. Though being the IRS I do not suggest depending on their good graces.
And, again quoting the IRS (see https://www.irs.gov/taxtopics/tc306):
– – –
The law allows the IRS to waive the penalty if:
1. You didn’t make a required payment because of a casualty event, disaster, or other unusual circumstance and it would be inequitable to impose the penalty, or
2. You retired (after reaching age 62) or became disabled during the tax year or in the preceding tax year for which you should have made estimated payments, and the underpayment was due to reasonable cause and not willful neglect.
– – –
I suspect that you’re right — that a lot of the tax changes in 2018 will mean that they will use case (1) a lot. Case 2 is irrelevant for these purposes.
Certified Public Accountants are the professionals that, among other things, provide tax advising services. I understand that the really busy times for tax CPAs are in spring around the April tax deadlines and in fall around now.
People with regular finances file the paperwork once a year, due in April. If they have a normal employer, that employer is required to garnish their wages, giving some to ‘Social Security’, and some to the IRS. If they are self employed, they file in April, and pay estimated payments four times a year. April, June, September, and IIRC January. Then you file the paperwork for that year, due in April, listing your actual income and expenses, and do the calculation for what your actual tax payment should have been. If your estimated payments were low, you have to pay the IRS. If they were higher than the actual tax, in theory the IRS has to give the money back.
I don’t discuss the more complex stuff, because I do not really understand it.
I will say that the USA has, let’s assume, 350 million people. A Federal bureaucracy intended to regulate that many people, in some way, can be bigger or smaller. A small bureaucracy of a thousand people might be small enough to get things resolved when one employee is being obnoxious. The President, or even one of the 435 Representatives, might be able to get something addressed. But at that bureaucracy size, there is one bureaucrat for every 350,000 Americans. That bureaucrat cannot understand that many people as anything other than paperwork. A bureaucracy of a million people is still not quite large enough to really understand the 350 people per bureaucrat. But at that size, there must be a fair number of horrible people working as bureaucrats, and there will be quite serious management problems inside the bureaucracy. At that scale, if a bureaucrat is sending someone to jail for no reason, a Representative is going to have a very hard time addressing it, if they can at all. The IRS is, I recall, 90,000, and there are fewer than 350 million taxpayers.
‘Social Security’ is another wrinkle. In theory it is separate from other taxes. It is a different item on the list of things that the Federal government makes employers garnish from wages. The original sales pitch, is that you would pay into it while you are working, then when retired or disabled, payments will be made to you based on what you paid in. In practice, Federal government accounting deposits Social Security payments to the general fund, and makes payments from the same source. So when more Social Security money is coming in than going out, other programs are paid for from the difference.
On social security, when more was coming in that going out the difference was as you note sent to the general fund, but an equal value of Treasury notes was deposited in the social security lockbox. All electronic of course, there is no physical lockbox, same for those T-bills. Just remember that government bonds are promissory notes backed by the full faith and credit of the U. S. government. In other words IOUs.
The thing is, what with the economic downturn of the past decade and the stagnation in the job market, an increasing number of folks decided to either retire with social security or apply for supplemental security income which also gets funded out of the SS bucket. The cash flow turned negative somewhere around 2014, so from that point on the funds coming in no longer covered payments going out meaning that some of those lockbox T-bills had to be cashed in. And the money to pay for that comes right out of the general fund.
To use a rural analogy that cash cow that congress has been milking for a good many years suddenly turned into a bull with very sharp horns.
It’s actually worse. Those IOUs are not actually bonds/treasuries. They are an accounting fiction. When the money is needed, then those IOUs are “converted” into actual bonds and sold to the public. On the bright side, since they are not real, there is no interest rate/coupon on them, so we’re not paying ourselves interest.
As opposed to the actual financial instruments the Fed was buying during quantitative easing, which are real things that can be bought and sold without any accounting shenanigans.
And it’s amazing that every blessed one of us is using one and one half plastic straws per day. I can’t even remember when I last used a plastic straw. That means…SOMEBODY ELSE IS USING MY STRAWS!!!
Goals: To finish the WIP (currently at 8400 words) and one more novel before the end of the year. Anything else is gravy. To release three books before the end of the year. Again, more stories would be gravy. To get everything organized on my (editor) end before the Call for Stories for the anthology* next year.
I write best with music on and a block of time, an hour or two at least. I can write in shorter bursts, but chunks of time are better. I can do a thousand words an hour on a regular basis. Afternoons are the most common, but that’s day-job habit rather than necessity.
*Anthology based on “What if those who left Omelas decided to return?” [See Ursula K. LeGuine’s famous story about that city]
YEEEEEEESSSSSSS!!!!!Valkyries to the FRONT!
Sorry. Got excited. ~:D
Yes! What if someone decided that the people of Omelas did not have the right to do that?
That’s the theme of the anthology, I think, at least judging by the responses I’ve seen thus far.
I saw that when it first crossed the comment sections and sat down a tried to think of a workable story idea – I have to start somewhere. Thirty minutes later I had a space mermaid, which is probably a silly idea.
I guess I’m orthogonal to everybody else.
Got some pretty whacky inspirations myself.
… and it started out so reasonable, too. I needed a reason why the protagonist would hesitate to head into the City and Rescue the Kid: they would be risking somebody besides themselves.
They seldom turn as fast as a werewolf; they GROW into something else entirely.
I’d like to be writing, and tracking wordcount. I instead have a pressing need to focus on reading and arithmetic right now. But perhaps I could find a way to track those?
Funnily enough I have been keeping track and the general answer is not enough. On reflection this started back in March and was the indicator that things were about to derail; a relapse of my rheumatoid arthritis that snuck up on me over a period of three months.
I am being treated, but the last time I was on DMARD therapy it took three months to be well enough to return to paid employment, and a bout a year to be in remission. So I’m cutting myself some slack on my targets. I have no choice but to do so.
So, August has been mostly copy editing. One novel and one novelette done. And, I’ve just checked that despite thinking I’d written zero new words of fiction in August I did write some. About a day’s normal output for me, but all things considering that’s better than what I thought.
Glad to hear you’re getting treatment now, and here’s hoping it goes back into remission! And hey, at least the tracking lets you know that you’re not doing as badly as you fear. That’s definitely a welcome thing to know when you’re feeling frustrated and upset at your own body.
And congrats on getting two things out this year: you’re doing better than me!
Thank you for saying so. Brought tears to my eyes. Just a bit fragile at the moment.
*hugs* Take it easy on yourself. You’re doing okay for having to fight your own body as well as the universe in general. Remember that you’re loved, and you’re accomplished, and that the depression lies. Things will get better!
I haven’t been keeping track of these things quantitatively, but I do know some things about my own behavior:
(1) Keeping track of “time spent writing” is difficult, because my writing time always goes roughly like this: open document, realize I haven’t read Sarah’s blog yet this morning, go back to document and write a sentence or two, come read what the mad geniuses are up to, refresh the mad genius blog to look for new comments, write another couple of sentences, check for new comments at the mad geniuses again, go look at the “Thoughts of Dog” twitter account, etc. Eventually I start writing more and checking less, and I do reach a point where I’m just writing and not doing internet stuff, but it’s hard to figure out how to calculate the total time.
(2) With the above in mind, I definitely need to write in large chunks of time. The goofing off always happens at the start, so the longer I can stay in the groove after I get there, the better. However, there is a limit. Usually at a chapter break or a scene break, I’ll get to a point where I just have no idea what to put down on the page next, and if I try to force myself to keep going, I’ll revert back to the goof off stage.
(3) I seem to write best while watching sports. Thus far, my best month has been March wile the NCAA tournament was on.
Have you considered monitoring political speeches? I find them even more suited to tuning-out than sports!
YTD: Minor writing, final polish and published–1 novel, 3 short novels, 3 novellas. Plus 166k words of new stuff this year.
4th Quarter Goals: Finish and publish one more novel, and 3 short works.
Work habits to be aware of: Get off the Internet! Mind the diet, carb fog is bad for the creativity!
No music or background noise. TV is especially bad. I haven’t tracked the hours, just noticed what made the writing possible vs impossible.
Thanks for the reminder on taxes… sigh… 2500 words a writing day is the goal. I have to take a break every hour because of the back, so constantly interrupting myself, but movement is required. Finish WIP, and possibly one other. Maybe another Novella, depending…
Fall in Ontario: I have a complaint.
Two days ago, it was 100F on my front porch. Yesterday it was 80F when I was cutting the lawn.
Today at 2:00pm it is 59F on the front porch. I’m sitting here in a hoodie. 😡
Here endeth the complaint.
Ah, yes, the temperatures have fallen, and the leaves soon will, too!
…Here in North Texas it was 74F yesterday afternoon. Which seems quite normally warm, until you realize the temps have been coming down from 114F. Stay warm!
Ontario has its good points, but the weather isn’t one of them. Heat wave one day, cold and overcast the next. One day of decent weather in between? No. Not a chance.
I’ll have to get the chainsaw limbered up now, there’s no longer any excuse not to get my work done. Dead trees don’t go away if you ignore them, they just lie there defying you. Going to need that wood come winter too.
I drove across North Texas once, in the 1990s, on my way to Arizona. It seemed very flat. ~:D
it wasn’t a week ago that I was leaving windows open all night and still not really cooling down the house.
Today? Wondering whether I should turn the heat on.
Thanks for info. We have similar rules with double-cost for self employed, but still only have to file once every year.
We only file documantation once a year, but we send them a check every quarter.
I want to finish out the year having written five days a week, and get the typo-corrected version of Shattered Under Midnight uploaded, and also out in paperback. (Which may require me learning how; Peter’s swamped enough he hasn’t gotten the rest of the Cochrane’s Company out in paper, much less mine. So much for division of labour!)
I got one book written and published this year, a second one written and trunked (it’s got some structural flaws, so it’s not going to be published until I get better enough to redraft the thing from scratch.) I doubt I’ll get a third finished before year end, but I keep writing every day.
Hope you get better then. Take care.
does doing a VO for YT videos count as writing?
Dunno. Did you get paid? And, no, a six-pack doesn’t count. Unless it’s delivered by the Swedish Bikini Team, in which case I’d like to meet your agent. (Full disclosure: I used to write commercials for radio. It was amazing, what I got away with, and not just ending sentences with prepositions!)
not until I get 1000 subs I don’t.