“It’s important to note exactly what ‘tax deductible’ means; I hear lots of folk on the con circuit use it in a way that gives me the impression they think it means ‘free.’…”

Maybe they’re just confusing “tax deduction” and “tax credit”? That’s a common mistake off the con circuit too.

Ben Towle Says:

“…Correct me if I’m wrong here (my accountant does the nuts and bolts of my taxes), but… it just means that you get to deduct those expenses from your yearly earnings, which themselves get taxed. So if you had, say, $1000 of tax deductible expenses from going to SPX and you’re taxed at 15% (just making up numbers here), $850 of that’s still coming out of your hide…”

The difference between a tax deduction and a tax credit is that a tax deduction is exactly as you describe here and if you had, say, $1000 of tax credits from whatever and you’re taxed at 15% (using the numbers you made up here), none of that’s coming out of your hide because you subtract the $1000 from what you owe in taxes instead of subtracting it from what you owe taxes.

One thing I’ve seen A LOT of this year is people who thought they were being paid regular wages which would come on a W2. Yet wound up getting 1099 MISC which is like they were self employed contracted to work for the company.

We enter that total on a special form, and then work like crazy to find deductions on that to lower it for their AGI so they have less taxes to pay.

Though of course you have to be careful on that too, as too many deductions making for a net loss for too many years and the IRS starts considering it a hobby more than a business. And a hobby’s expenses can only be taken up to the amount of revenue made by the hobby.

Anyone bored yet? :) Another tax related comic thing. If you’ve worked for DC’s Wildstorm imprint in recent years, its my understanding that you may get a letter from the state of California demanding state income taxes. Its a tricky situation, but if you get with DC you can probably get it handled without much fuss. (and no cost to you) CA is bankrupt and not able to pay out their state refunds, and are looking at any way possible to get funds.

I’ll admit that I occasionally find myself thinking like that too – “oh, I can write that off.” but yes, it means you subtract the cost of those items or services as an expense of doing business. if your expenses outweigh your earnings, then you’ll have had a negative year and won’t have any ‘earnings’ to pay taxes on.

on the flip side, say you brought in $5000 in sales for a year, but spent $3500 on a new computer. your earnings or profit would then be $1500 and *that* is what you’d pay taxes on.

at least that’s how I remember it. I’m going to see my accountant next week so we’ll see if I remember correctly.

Correct me if I’m wrong here (my accountant does the nuts and bolts of my taxes), but… it just means that you get to deduct those expenses from your yearly earnings, which themselves get taxed. So if you had, say, $1000 of tax deductible expenses from going to SPX and you’re taxed at 15% (just making up numbers here), $850 of that’s still coming out of your hide.

People sometimes seem to justify expenses that make zero economic sense with, “oh well, it’s tax deductible,” as if $1000 of tax deductible expenses = $1000 less you pay in taxes. Not at all the case….

Tyler, good to know! I just started working for H&R Block this year and its just been surprising to see how many things there are that I never would have even thought of that can be written off. (for instance if you went to a movie while at a con, that’s covered under an entertainment writeoff)

Here’s a thought that usually makes me feel better about the costs: lots of people spend stupid amounts of money on their all-consuming passions (golf, for example, gets pretty expensive), with no financial return on the investment. At least with comics, I get to make some of that money back!

But seriously, even if you keep costs down with POD, you’re still cutting yourself off at the legs since your margin is so much higher getting the books made to order for a convention appearance. And if you want to be in Diamond you HAVE to do an offset run in order to have any hope of making that back.

If I go off of the old e-comm benchmark of 1% of traffic will convert, then as of now, I don’t have enough fans right now to extrapolate that to a real world appearance (unless I get invited as a guest, which happens occasionally – free tables will convince me to go to a con).

Personal story: Got a table at a large con right after I won the Isotope award. Sold 10 copies and received one sneer from a kid carrying a signed copy of Badrock/Wolverine. One of the most depressing weekends of my life.

After that, I decided to spend more time on promotion and craft versus spending a ton of money on what was basically a series of expensive vacations.

Tyler, very much so. I admire your willingness to share the details and be open about the costs of all this. Thank you for educating us.

james – yes, all business expenses accounted for and written off. we work w an arts-specific tax firm here in Mpls.

In writing about my experiences I wanted to start by just pointing out the (potential) enormous expenses involved. I will get around to looking at my Diamond order numbers and, since people seem interested, get particular about where and when I made a profit.

I pointed out to a friend who read this that the years where I made a clear profit it was mostly because I took on freelance jobs which helped push me into the black.

I will get around to providing as much specific info as I can since I see a real lack of it out there. it’s just going to take some time for me to dive into my records.

The expenses alone are not a very useful metric. I hope he’s at least close to the break even point…