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Unemployed vs. self-employed while writing a novel full-time

Hello -

I am seeking clarity in how to describe my employment status this year for tax purposes.  I resigned my "day job" in December, cashed out some retirement funds in January 2025, and am using those funds to pay my rent etc. while I write my novel full-time. I'm planning on supporting myself with those funds for about a year (or until I come to my senses and find another day job!).

I understand the tax penalties around cashing out retirement funds before age 59.5, but what I don't understand is how to describe my employment status for this year.  

Am I unemployed because I don't have an external source paying me to write?

Or am I self-employed because I am writing full-time and effectively paying myself/supporting myself with the retirement funds I cashed out early?

My guess is that this makes me unemployed, but I saw this forum for questions and figured it wouldn't hurt to ask about the distinction between the two.

Thanks in advance for your guidance.

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2 Replies

Unemployed vs. self-employed while writing a novel full-time

What you enter for your occupation is only used for statistical purposes.  You can enter anything you wish but most will enter what there most current occupation was at the end of the year.

You can enter unemployed, retired, author or the job title you had for most of last year, the choice is yours.

Unemployed vs. self-employed while writing a novel full-time

Thank you so much @DoninGA  for your kind reply.  This is helpful.

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