Creators: Getting Ready for Tax Season
Creator Cash is now available on the App Store and Google Play Store. And we’re launching a suite of financial tools built for Creators this year. Schedule a quick call with us to learn more.
Let’s talk about Adam. Adam is a full-time Creator on YouTube, and he’s filing taxes for the first time this year. He has no idea where to start: there’s like 12 different forms, but not all of them apply to him? And Tax Day is right around the corner (April 15, so mark your calendar).
Let’s get Adam more prepared.
Because Adam is a Creator, he’s his own business. He’s going to be filing with tax form 1040 Schedule C. For 2020, the form looks like this:
Adam will go through and declare ALL his income. YouTube (technically, Google) will provide Adam with a 1099-MISC to help him report the income he earned from AdSense. Other platforms and brands you’ve worked with are required to do the same if they paid you more than $600, so keep a look out for those forms.
What exactly do I need to report?
Reporting income can get messy because Creators often have multiple streams of income. For example, Adam made money from ads, partnerships, and sales. It’s important that he reports all of it. Things like earnings, invoices, contracts, etc. are all taxable income.
This should give you a better idea of what you need to report, but it’s not a complete list:
- Platform revenue share—this is the income most people are familiar with. All earnings from YouTube/AdSense, Facebook, Twitch, Snap, etc. gets reported. Sometimes, the platforms may directly report your W9 earnings to the IRS.
- Brand partnerships—if you’re partnering with a brand on a more than a one-off basis or a single campaign, then you’ll need to report your compensation.
- Products—these are products that brands send to you to review like clothing, skin care, tools, etc. You report these as income at the product’s market value.
- Sponsored posts—these are posts that brands are paying you to create, like sponsoring a video, post, or a podcast episode.
- Other ads—Any income you receive from ads needs to be reported.
- Merch, courses, etc.—if you’re expanding your business by selling merch, offering online courses, etc. then that’s income you should be reporting as well.
What Can I Write Off on my Taxes?
If the part about reporting is starting to scare you, don’t worry! Creators and influencers don’t have to be stuck with a large tax bill each year. You can deduct quite a few things that pertain to your business. Like Adam, he’s going to write off the space he uses in his home for filming and content creation; the new camera he bought; and the prizes he used for giveaways when he hit 100K subscribers.
Here’s a good list of things to consider writing off:
- Office & rent — is your home office your all-the-time office? Write it off! Any office space or percentage of rent space you use for business is a tax benefit.
- Equipment—this goes for any phone, laptop, cameras, filming equipment, and other supplies that you use.
- Utilities — do you have utilities like phone or electricity bills? Or fees associated with hosting a website? That’s another tax benefit.
- Software, hosting, & apps — this is a bit of a broad category, but it includes subscriptions for stock photography and video, editing software, Zoom, etc. Basically, anything that you purchase or have a recurring bill on that applies to your business.
- Advertising, marketing, & prizes—however you’re promoting your business is a tax deductible expense. Using Facebook or Google to run ads online or even hosting a giveaway? You can write those off.
- Creative assistance & contractors — as you grow, so will your business and team. You can write off any hires or assistance from the year.
- Meals & entertainment — taking a business lunch or entertaining a client to discuss deals or relevant ideas? That’s a write off.
- Travel—you might not have done much traveling in 2020, but for future reference: any business travel expenses are considered a tax benefit.
These are just a few tips to get you started filing taxes as a Creator or influencer. Remember, always check with an accountant or financial advisor to double check everything!
While thinking of yourself as a business can be intimidating, we’re here to help! Like all things, take tax season one step at a time.
Creators lead a very different path than traditional careers. They contribute so much to our economy (and entertainment). As Creators find themselves thrust into success — and maybe even celebrity — their financial situation might not always keep pace. It certainly doesn’t help that traditional banks and financial tools are not setup for the complexities of the businesses.
We want to change that. Creators should take charge of their business and project their career and finances to new heights.
Creator Cash is now available on the App Store and Google Play Store. And we’re launching a suite of financial tools built for Creators this year. Schedule a quick call with us to learn more.
