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The Ultimate Guide To Taxes For YouTubers

7 minute read

Taxes become more and more complicated as new streams of revenue come into play. With the evolution of social media, cloud technology, and apps, the digital lines become blurry when determining what is and isn’t taxable. 

Here are some valuable insights into tax for YouTube derived income and revenue earned by social media influencers, including taxable income and what deductions you should consider.

What Are Social Media Influencers?

Social media influencers are those who generate income as content creators on social media. These sites include Facebook, Instagram, YouTube, Reddit, Snapchat, TikTok, and Twitter.

Essentially, influencers market products and services. They are usually individuals who have the status or knowledge to persuade potential buyers into buying products or services for brands. Influencers can use social media in several ways to make a profit like by promoting digital products, posting sponsored ads on social media, affiliate marketing, and podcasting.

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Do YouTubers and Social Media Influencers Have to Pay Taxes?

Requirements for tax compliance are based on the purpose of your social media accounts: are they used as a hobby or as a business? If your social media accounts are meant to turn a profit you can deduct eligible expenses from your taxable income, lowering your tax liability. If your social media accounts are a hobby, you are required to report the income on your taxes, but are not eligible for expense deductions.

What Income Do I Report as a YouTuber or Social Media Influencer?

There are several aspects of social media that qualify as taxable income. Therefore, there can be multiple streams of income from different platforms and projects. As an influencer, any income earned from YouTube channels must be reported. This includes:

  • Brand sponsorships;
  • Merchandise sales;
  • Collaboration earnings on products;
  • Affiliate link commission;
  • Ad revenue;
  • Products gifted for promotional posts.

Do YouTubers or Influencers Pay Taxes on Gifts?

Since a gift received as compensation is considered a form of income, taxes need to be paid based on the value of the gift. Receiving products to review where the total value is under $100 is an exception. If the value of the gift is under $100 you do not need to include it on your tax return.

What Are Tax Deductions For YouTubers and Social Media Influencers?

One strategy to keeping as much of your income earned from YouTube as possible is to reduce the amount of taxes you owe. One way to do this is to maximize your deductions. To keep as much of your income earned from YouTube revenue as possible and reduce the amount of taxes you owe, maximize your deductions.
Here are some business expenses that can be written off as tax deductions:

  • The cost of computers, tablets, or smartphones used for uploading and editing videos;
  • The cost of the equipment used for filming videos such as cameras, lights, microphones or smartphones;
  • Any software used for editing the videos;
  • Copyright and trademark fees;
  • Subscriptions, like stock photography;
  • Marketing and advertising costs;
  • Website costs;
  • Emailing service costs;
  • The percentage of cell phone and internet services used for YouTube;
  • Supplies purchased for videos;
  • Home office expenses;
  • Travel expenses;
  • Mileage.

These expenses must be considered ordinary and necessary to generate income to be tax deductible. Your YouTube earnings must also be considered a business and not a hobby.

How Do I File Taxes for Revenue Earned from YouTube and Social Media?

If you work as a YouTuber or social media influencer, then you’re more than likely an independent contractor. Since independent contractors are self-employed, you are required to fill out self-employment and income taxes. Self-employed tax consists of Medicare and Social Security.

As a self-employed individual or a freelancer, you should receive Form 1099-MISC from whoever you worked for if your payment(s) exceeded $600. Additionally, every brand you form a partnership with should send you a Form 1099-NEC if they paid you $600 or more. Even if you don’t receive a 1099-NEC because the project was under $600, you still should report the compensation as income on your tax return.

Freelancers and independent contractors should also pay quarterly estimated tax payments using Form 1040-ES to avoid being charged a penalty fee.

How Do YouTube and Google Handle Withholding Tax?

Google is required to withhold U.S. taxes that are generated from viewers located in the U.S.. Therefore, YouTube earners must submit their tax information to Google, no matter their geographic location,  so Google can determine the applicable tax rate and withhold any required taxes on earnings from U.S. viewers with Channel Memberships, Super Stickers, Super Chat, YouTube Premium, and ad views.

The requirements for tax withholding vary depending on three factors: your country of residence, whether or not you can claim any benefits from tax treaties, and whether you’re a business or an individual.

A foreign person is also subject to tax in the U.S. on any income that is generated within the U.S. Most U.S. sourced income received by a foreigner is subject to a 30% tax rate. YouTube is required to withhold tax when creators outside the -U.S. earn income from U.S. viewers. 

YouTube also requires creators to send their tax information. Form W-8 is meant for creators outside the U.S. and Form W-9 is meant for U.S.-based creators. These should be sent by the end of May so YouTube can determine how much to withhold. 

If the tax information is not submitted by that date, YouTube deducts 24% of income from all over the world as backup withholding. Creators based outside the U.S. who reside in countries with no tax treaties with the U.S., and have their revenue sourced from the U.S., are subject to a 30% tax rate.

Getting the Most Out of Taxes for YouTubers and Social Media Influencers

If you are a YouTuber or social media influencer and are looking to see what the legal and tax implications are, tools like Corvee’s tax planning software may help you quickly find the strategies available for this relatively new and emerging industry. Find tax deductions for your social media business by getting started with Corvee today!

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