What are the tax implications of publishing a book?

You know what we need to say first, right? “Consult your tax advisor for any and all tax advice”!

In general, this is a general overview of what to expect as an author: Your book may or may not sell. (We hope it sells almost as much as you do!) Whether one copy or one million copies sell, the payments on books for most people are considered “royalties” and not regular income in the traditional sense. Depending on what your tax adviser says, you may have tax advantages in receiving royalties as opposed to traditional income.
Keep in mind that you don’t need an official publishing business with its own tax ID to own your own publishing empire today! An example to help clarify: Suppose you write and publish five books on five different subjects, you can publish them under five different fictitious publisher names! Amazon doesn’t care, the IRS doesn’t care, and your readers certainly don’t care.

What Amazon and the IRS do care about is where the income goes. This comes from the tax ID information you give Amazon when you create your self-publishing account. (By the way, we can also do this for you or walk you through it.) You might be Julie Smith or Joe South sitting in your pajamas pumping out one book a week in your bedroom. If so, then you may want to be taxed as an individual by simply telling Amazon your Social Security number when you create your publisher account (obviously, if you live outside the USA, you’ll have a similar number for your government’s retirement plan). Amazon will never make you put your name on any of your books as the publisher name. You don’t even have to be the author, you can make up a pen name just as Samuel Clemens did (think: Mark Twain)!