If you earn royalties through Amazon KDP or similar platforms, you'll typically receive a 1099 form reporting that income to the IRS, and if you paid a freelancer (an editor, illustrator, or narrator) $600 or more in a year, you may need to issue one yourself. Understanding which forms apply to you, and which direction they flow, removes a lot of the confusion authors run into at tax time.
This article provides general information for U.S. authors, not tax advice. Consult a qualified tax professional for guidance specific to your situation.
This is part of the Complete Guide to Author Business Basics.
1099-MISC (or sometimes 1099-NEC), from your publishing platforms. Amazon KDP and similar self-publishing platforms typically issue a 1099 reporting the royalty income they paid you during the year, if it exceeds the reporting threshold. This form gets sent both to you and to the IRS, which is part of why unreported platform income is easy for the IRS to catch.
1099-K, from payment processors. If you receive payments through platforms like PayPal, Stripe, or similar payment processors for direct book sales or related services, you may receive a 1099-K reporting those transactions.
A common misconception: if you didn't receive a 1099 for a particular source of income, you don't have to report it. This isn't correct. You're required to report all business income regardless of whether a 1099 was issued, whether because the amount fell under a reporting threshold or because whoever paid you made an error. Keep your own records of all royalty and business income independent of what forms you do or don't receive.
If you're operating as a business (which, as an author earning royalties, you generally are) and you pay an independent contractor, an editor, cover designer, illustrator, or narrator, $600 or more in a calendar year for services, you're generally required to issue that contractor a Form 1099-NEC and file the equivalent with the IRS, by January 31 of the following year. This requirement generally doesn't apply to payments made to a corporation (as opposed to an individual freelancer or sole proprietor) or to a service that itself operates as a larger business, like a platform-based editing service.
To handle this properly, collect a Form W-9 from any contractor before or when you pay them, which gives you their tax information needed to prepare the 1099.
For most self-published authors actively working as writers (rather than someone who wrote one book years ago and now receives passive royalties with no ongoing involvement), royalty income is generally reported on Schedule C, which allows you to deduct related business expenses against that income. In some more limited circumstances, particularly for authors not actively engaged in writing as a trade or business, royalties may be reported differently, on Schedule E, which doesn't allow the same business expense deductions. Most working authors fall into the Schedule C category.
Income reported on Schedule C is generally subject to self-employment tax (covering Social Security and Medicare contributions you'd otherwise have withheld by an employer), currently 15.3% on net self-employment earnings above a small threshold, in addition to regular income tax. This is a significant reason many authors are surprised by their tax bill the first year they earn meaningful royalty income; there's no employer withholding this automatically the way a traditional paycheck would.
If you have foreign publishing deals or sell through international platforms, you may encounter foreign tax forms or withholding, which can be a more complex area, sometimes involving treaty forms to reduce foreign withholding on your behalf. This is a common point where consulting a tax professional, rather than handling it entirely yourself, is worthwhile.
Many authors and tax professionals suggest setting aside roughly 25% to 30% of net royalty income to cover income tax and self-employment tax combined, then refining that estimate with a tax professional or IRS guidance as your specific situation becomes clearer. Setting this aside as income arrives, rather than scrambling at tax time, avoids one of the most common financial stresses new authors run into.
Focus on Writing; Consult a Tax Professional on the Rest
While Entrada doesn't provide tax advice, we're glad to help authors think through the publishing side of their business.
Yes. You're required to report all business income regardless of whether a 1099 was issued for it. Keep your own records independent of what forms you receive.
Generally if you paid an individual contractor, such as a freelance editor or narrator, $600 or more in a calendar year for services, you typically need to issue a 1099-NEC by January 31 of the following year.
Most actively working authors report royalty income on Schedule C, which allows deducting related business expenses. Some passive royalty situations may be reported differently, on Schedule E.
A commonly cited rule of thumb is 25% to 30% of net income, to cover both income tax and self-employment tax, refined with a tax professional as your specific situation becomes clearer.