Author fees tax deductible?

I was confused about something when I made this post. Mod can remove!

Sure, that are business expenses. But it depends on what you declare as your income. If you only declare what you receive on you PayPal account, then you can’t deduct the author fee because it’s already deducted from the received money. As a freelancer you normally declare your gross income and deduct all business expenses.

Gotcha, that makes sense. Thanks!

If you are a US author, Envato will send you a 1099 form. The total on this form is the GROSS, not NET. So you have to subtract out the author fees yourself and list them as your expenses.

This seems like a dumb way to do it on Envato’s part. What, if I make enough cash so that author fees exceed $600, I have to send Envato a 1099 in reverse, to tell the IRS how much I paid THEM?

Yes, this is correct.

It used to be a lot more simple. Envato sold the item for us, and gave us a commission. But I guess they wanted to take advantage of something tax related, probably, and changed their model to “you sell your items here, and we’ll take a percent” even though we can’t even see who “our” customers are.

No. You’re selling items here, and Envato is taking fees for each sale. This situation does not require sending a 1099.

It’s really confusing because their newer business model is a bit deceptive. From a US perspective, we believe it should either be 1) they sell on our behalf and give us a commission or 2) we sell here and they take a commission, but Envato is not fitting either of the 2, they’re sort of in between and are trying to pretend like they’re #2.

Of course you should always seek advice of a tax adviser if you have any questions or concerns. :slight_smile:

quote from “Instructions for Form 1099-MISC”

Use box 2 to report royalty payments from intangible property such as patents, copyrights, trade names, and trademarks. Report the gross royalties (before reduction for fees, commissions, or expenses) paid by a publisher directly to an author or literary agent, unless the agent is a corporation.