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I've self-published a book and have sold a few hundred dollars worth of books from the back of my car. (I know I need to pay sales tax on these books.) I have a simple sole proprietorship business in Ohio, and when I used Turbo Tax to file this year, they indicated that my business should file federal form 1099 misc for my royalty income to myself. Is this the case? Thanks, Janet

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  • Thank you for your replies. They make sense, and it sounds like I need to file an amended tax form. :-(
    – user14679
    Commented Apr 22, 2014 at 16:41

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You do not need to file 1099-MISC to yourself if you're running as a sole proprietor - you are yourself. However, you do not deduct this amount from your business income and report it as royalties either.

Your self-published book is your business income subject to SE tax. You can only deduct the actual costs of producing/writing, and the remaining amount is your Schedule C income.

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No, do not file a Form 1099. You should not issue a form to yourself and you have no separate entity to issue one. The reporting obligation is Form 1040, plus Schedule C.

You may have followed a wrong turn somewhere in the TurboTax questionnaire or it may not have picked up the subtleties of your situation. The business income is already yours.

Some writers use vehicles to hold their royalties and pay themselves. The questionnaire may have been trying to get at this issue or may have wrongly assumed it. There are special rules around such entities, so getting an adviser is a good idea.

For now, just file Schedule C, remember to deduct your costs (e.g. cost to print the books), and pay your self-employment tax.

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As littleadv says, if you're a sole proprietorship, you don't need to file a 1099 for money you pay yourself. You certainly will need to file a schedule C or schedule E to report the income. And don't forget SE to pay social security taxes on the income if you made a profit.

If your company is a corporation, then -- I'm not a tax lawyer here, but I think the corporation would need to file a 1099 for the money that the corporation pays to you. Assuming that the amount is above the threshold that requires a 1099. That's normally $600, but it's only $10 for royalties.

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