Do content creators pay taxes on money earned?
are you creative
There are many new industries that have emerged as a result of this pandemic. One industry that has exploded is the Creator Economy, which includes influencers on TikTok, YouTube, OnlyFans, and Streamers. For many influencers, what started as a fun thing to get them through stay-at-home orders is now helping them earn a significant income. According to the latest TurboTax data:
Get every dollar you deserve with unlimited tax tips from experts who know self-employment taxes inside and out. Whether you’re freelance, independent contractor, small business owner, or have multiple streams of income, TurboTax Self-Employed can help you uncover industry-specific deductions for which you qualify. Plus, you can get an additional discount of up to $20 when you file a file with TurboTax Self-Employed.
- There was a 207% increase in taxpayers claiming creator, influencer, influencer, or related term as a profession, from tax year 2018 to tax year 2020
- The average age of a TurboTax file claiming a creator is a profession is 27; Of these, 47% submitted their business as self-employed and 51% filed without a W2 – indicating that nearly half of these taxpayers rely on their occupation as their primary source of income.
- Top creator jobs include Streamer, YouTuber, Twitch Streamer, Influencer, and OnlyFans.
Whether you’re a TikToker earning money showing off your favorite dances or you’re an influencer sharing the best beauty products on Instagram, we’re here to answer some of the most common questions we hear from creators about newfound income streams such as:
- “Is my creator income from YouTube, TikTok, and Instagram making me self-employed?”
- “When should I claim my income from being a content creator?”
- What can creators write off their taxes?
TurboTax Self-Employed will easily guide you through your taxes if you’re a creator and help you uncover industry-specific deductions related to your work as a creator, but here’s a breakdown of what you need to know about your taxes as a creator.
Will the income from creating content for social media or broadcasting make me self-employed?
If what started as a few posts for fun has evolved into creating content for monetization, you are considered a self-employer and will need to file your self-employed taxes at tax time. On the bright side, you can deduct a lot of expenses related to being creative from your taxes.
When do I have to report my income as a creator?
If you are self-employed as a creator, you will have to report your income and file your taxes if you earn $400 or more in net income because this is the point where you have to pay self-employment taxes, which are calculated when you do your federal taxes. Self-employment tax is calculated automatically by TurboTax Self-Employed when you do taxes and is the Social Security and Medicare tax paid when you are self-employed.
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If you’re employed, you’ll usually pay FICA tax, which is 7.65% of total income, and your employer will also pay a similar percentage, making it 15.3% total. If you’re self-employed, you have to pay both sides of that tax, or 15.3%. The good news is that the IRS allows you to deduct half of the self-employment tax from your income on your federal taxes. 15.3% is calculated based only on your net business income, not your total income, so the more tax-deductible business expenses you can claim, the lower that tax will be.
What tax forms will I receive, and where will my income be reported as an originator?
You will receive a Form 1099-NEC if you earned $600 or more or perhaps a 1099-K if you had 200 transactions and made $20,000 in 2021 (for tax year 2022 it will be $600 and there will be no transaction limit). Even if you don’t get a 1099-NEC or 1099-K, you must still claim any income from your business from your taxes.
What are some business expenses that content creators can deduct?
There are a lot of expenses creators can deduct that can lower their taxes such as:
- Website development
- Starting costs
- video equipment
- home office
- car expenses
Check the self-employed tax deduction calculator for other expenses you may be able to deduct.
For more tips on the creator economy, listen to Podcast hosts Kat, Lauren, and Daniel for an in-depth conversation about their personal experiences and perspectives.
What do I do if I still need to file my taxes?
Don’t worry. TurboTax Self-Employed can help you easily and accurately file your taxes and disclose industry-specific deductions, whether you’re a start-up or running your own business in another specific industry.
You can also connect live via one-way video with a tax expert working for TurboTax Live to get help along the way and review your taxes before you apply. TurboTax Live’s freelance tax experts are available year-round in English and Spanish, and you also get the same tax expert each year.