6 Tax Questions from Indie Authors | Author Taxes 2023 | Self-Publishing Royalties and Taxes

*I’m not an accountant. I am sharing my experiences as an author trying to make sure I pay the right amount in taxes and some of the common questions I have had over the years. For your specific tax situation, consult an accountant familiar with your county, state, and country.*

I’m releasing this on January 25, 2023 because, for U.S. citizens, MOST of your tax documents are due to you by January 31st. Whether that is your day job W2 or your 1099s from self-publishing platforms. So if you get to next week and you don’t have a form:

Log in to that account and see if those forms were distributed digitally
Email the customer support team to determine if a 1099 or another supporting tax document is going to be provided to you.

I keep a thorough track throughout the year of my income and my qualified expenses. I know exactly how much has hit my business bank account, but I always double-check that against the tax forms I receive. Most of my taxes are reported on a 1099, either a 1099-C, a 1099-MISC, or a 1099-K.

Does IngramSpark send a 1099?
No. Use the monthly invoices they send to confirm payment as your documentation for payments received.

Who is Lightning Source and why doesn’t my bank show any payments from IngramSpark?
Since you don’t get 1099 from IngramSpark you need to report what you were paid, but none of your payments show as IngramSpark. Hmm. Lightning Source is a print-on-demand service that is owned by Ingram. So Lightning Source or LSI payments are your IngramSpark royalties and your IngramSpark royalties show as Lightning Source on your bank account statements.

Do I count my sales or earnings for taxes?
Earnings. Or at least that is what I do using a “cash-accounting” method. I pay tax on the money that hit my bank account. Many platforms have a 60-90 day payment delay so that big rush of sales if you launched in November or December of 2022 won’t impact this year’s taxes but next year because you haven’t been paid those royalties yet. This matches with how the platforms provide 1099, the 1099 is based on what they paid and withheld in the calendar year.

Why did I get two 1099s from Amazon?
If you have your books on KDP and ACX you will get two separate 1099s, one for each company. Yes, they are all technically Amazon, but you get separate tax forms.

Why are my royalties from ACX off?
I discovered this one last year. In 2021 ACX changed their policies for anyone with a royalty share deal, and one of my books is in a royalty share deal. Now, even though the full royalty from that royalty split does not hit your bank, ACX reports that full royalty amount as income to you the author. The royalty that you split with the narrator is included in your 1099. That means you need to keep track of all your royalties on those deals and count the 50% that goes to your narrator as an expense for your taxes. ACX now says, nope you the author are paying the narrator, not us, even though ACX handles the entire transaction. Makes no sense, but that’s what it is.

PayPal 1099s
In 2022 PayPal announced they would start to provide 1099s for any account with income over $600. So, if you get that 1099K from PayPal this year, double check none of the income is double-reported.
https://newsroom.paypal-corp.com/2021-11-04-New-US-Tax-Reporting-Requirements-Your-Questions-Answered

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