Um… no, that’s not the right start. Let’s backtrack a bit.
I’ve known that author royalties above $10 must be reported on a 1099MISC, when almost every other form of income has a threshold of $600. I remember writing nasty notes to my congresscritters, back when I discovered that unsavory little fact. But last year, I let a friend convince me that the royalties bit referred to oil and gas payments, not authors. Authors, she said, should be reported on the line for nonemployee compensation.
It didn’t make any difference, last year when I let myself be led astray. None of my authors (all one of them, at the time) had earned $10 in royalties, much less $600. But I remember feeling a warm little glow over that revelation. The IRS weren’t all that bad; they’d left an out for authors. They understood most authors weren’t earning such amazing amounts that they’d be good plucking for tax money. And I admit, I probably wanted to believe this, which likely made it easier for me to let myself be convinced.
Well, that fantasy bubble just got popped. The royalty threshold for authors really is $10, not $600. This year, to make sure everyone knows that fact, the IRS put it in the instruction manual:
“Report the gross royalties (before reduction for fees, commissions, or expenses) paid by a publisher directly to an author or literary agent…”
Ten bucks. Ten measly little bucks. The IRS, and the big, bad federal government, really is so desperate for every penny that they’ll reach into an author’s pocket for ten bucks.
Sure, I believe in spreading the tax load. The scary financial situation in Connecticut shows what happens when taxes concentrate on the “rich” or even the upper middle class. People who have some skin in the game (e.g., paying for the U.S. government through taxes) tend to take more of an interest in the game itself (the politics and rituals of governing). But ten bucks?
After the fiasco with the 529 college savings plans, maybe I shouldn’t be surprised. They really are starving for pennies in Washington, as Megan McArdle discusses. But at the risk of broken-recording this to death… ten bucks?
Okay, rant over. Thanks for listening and for stopping by. Cheers,