Definitions and Forms:
For IRC 263A(h) article (8/10/11)
Self-employed / free-lance: You are not an employee. Neither social security taxes nor income taxes are withheld from any payments you receive from the payer. You are responsible for paying your own taxes (self-employment taxes and income taxes) on the income you receive.
Activity for profit: Are you writing just for fun (hobby) or are you wanting to make a living by writing? If you are writing to make a profit, then you are considered a business (activity for profit) for tax law purposes.
Form 1040, Schedule C, Profit or Loss From Business: Form 1040, Schedule C is used by self-employed writers (or anyone who is self-employed) to report income received and expenses claimed from your free-lance business. The net profit or loss is carried forward to Form 1040.
Form 1040 (U.S. Individual Income Tax Return) and Schedule A (Itemized Deductions): These forms are used to report income and claim expenses for a hobby.
IRS Website: www.irs.gov