Hello and thank you for joining us today!
Sorry to hear about being laid off, but glad to hear you are working on writing publishing your book!
One thing to consider is that unemployment is taxable, and great job for withholding the taxes. This income will be counted as part of your total income on your tax return, and be taxed based on your tax bracket.
When it comes to filing jointly or separately, it is hard to determine which one is more beneficial, but it is also important to consider that there are limitations on credits and exclusions that come with married filing separately. It is the least preferred filing status, but determination is made case by case.
When you are a sole proprietor, your income and expenses in most cases are reported on a Schedule C, that is part of your personal tax return. Registering your sole proprietorship as a LLC separates the business as a legal entity. This is beneficial because it shields you from personal liability in case of a lawsuit for example. There are other elections that you may consider, here is an IRS link that provides detailed info on business structures: LINK
Another helpful link on Single member LLC
It is also important to note that for your writing to be considered a business, we must follow these IRS guidelines on distinguishing between a business and a hobby. If a taxpayer receives income for an activity that they don’t carry out to make a profit, the expenses they pay for the activity are miscellaneous itemized deductions and can no longer be deducted. The taxpayer must still report the income they receive on Schedule 1, Form 1040, line 21.
Good luck!
