Hey everybody, I’m Suresh, helping you create something awesome today. Today we’re talking about YouTube taxes and what you need to know as a content creator. So I’m going to be answering your most asked questions when it comes to the situation of YouTube taxes and where your tax responsibility is.
10 Tax Tips for YouTube Creators
1. YouTube Pays Any of Your Taxes?
The answer is no. YouTube does not pay any taxes for you. They do not take any taxes out of your YouTube earnings or your ad revenue. You are entirely responsible for your YouTube taxes. When you become a YouTube content creator, and you’re monetizing your content, you are not an employee of YouTube, you are an independent contractor getting a 1099 form, and so they will send this to you directly.
If you live in the US or again, the tax agency in your country, and you will need to pay those taxes yourself. So kind of keep that in mind. This is also true if you make affiliate revenue on YouTube. You will need to pay the taxes on your affiliate revenue with all the different affiliate programs you are doing. You will also need to pay the taxes on any sponsorship and brand deals.
All of your YouTube AdSense, whether that’s Super Chats, the ad revenue, YouTube premium channel memberships, all of it is taxable income, and you will need to pay that.
2. Can you deduct purchases like equipment for your YouTube channel?
If you are using your equipment and any of those purchases in your job as a content creator, the business that you are doing, then you can deduct those things. You can go ahead and claim them. They need to be essential, reasonable, and necessary to your business, and if you can say that honestly, you can go ahead, and you can claim those deductions. Just make sure you’re keeping your receipts for everything and try to do proper bookkeeping.
3. When do You Need to Pay YouTube Taxes? What if you’re a smaller YouTuber? Do you need to Pay Taxes?
The answer is yes. Technically here in the United States, you need to report and claim all income, but if you make $600 or more, you have to claim it on your taxes.
4. When do you need to consider YouTube a business?
How much money do you need to make before YouTube is a business?
It’s not about how much money you’re making, and it’s about your intentions. If you are making money with YouTube as a hobby, you will have to claim the income, so you’re going to have to pay and file those taxes.
But regardless of how much income you’re making, if you consider YouTube to be a business and a business opportunity for you, then you need to treat it like that, and you need to handle it appropriately. The good news is that you would qualify for deductions as a business, and that could save you on your taxes so you can save a little bit of money if you think about it as a business.
5. What can I deduct as a YouTube content creator from my taxes?
Well, again, these need to be reasonable and necessary expenses for your business. So if you decide to buy an online course to learn about YouTube, you choose to hire a YouTube coach like me, you can deduct those expenses from the business as reasonable and necessary. If you buy camera gear, lights, audio, those things can be deducted from your company.
If you are a travel content creator, as long as you are going there and traveling for business and filming content, let’s say it’s a collaboration. You can claim those things on your taxes as long as you can say and prove that they are reasonable and necessary expenses for your business.
6. How much should you set aside for your YouTube taxes?
Now, tax rates vary from place to place, country to country and even state to state, here in the U.S and so you will want to look into what the tax rates typically are at a state level. Maybe your country doesn’t even have income taxes, business taxes. So look into those things, but the rule that I usually play by is to set aside 30% of my overall income for taxes.
The way that I typically approach it is I take that 30% the moment I receive money, the moment I receive payment, I take 30%, and I set it aside. Now, this is probably more than necessary, but it does mean you have coverage, and it means that you won’t have a lot of anxiety around this later, so take that with a grain of salt.
7. Should I pay taxes quarterly or yearly?
Now this one is tricky for a lot of people, but something that my friends at TurboTax Self-employed recommend is that if you are making over a thousand dollars a month, they’re going to suggest that you do pay your taxes quarterly. If that’s what makes sense and that’s also what is recommended to you by a CPA, then I think you should go with that guidance and that advice. The most important thing is to make in mind you’re setting aside money for your taxes so that that amount of money that you owe doesn’t pile up and that you are paying it.
8. Set Aside Money for their Taxes
It isn’t necessarily directed at charges but because people realize they have to set aside money for their costs. Many people ask me if they should set aside any other payment from that income that they’re making as a content creator. I believe that is more than responsible to not only set aside maybe 30% for your taxes but some additional money to cover operating costs and to have money to reinvest into yourself.
What I typically do is set aside another 10 to 20% that I can take away from my overall income, and in my case, I like to put these into my retirement accounts where I can get additional tax benefits. In my case, I set this aside into a Roth IRA and also into a SEP IRA, which is a Self Employed Pension.
Look at where you can gain some tax advantages by talking to a professional and realizing that there’s a lot of benefit to going ahead and putting something away for your retirement and your future. The odds are you’re not going to be a YouTube content creator forever.
9. Do I need to be a full-time content creator to incorporate as a business?
No, you don’t, and there may be many reasons you might want to incorporate, either as an S corp or as an LLC. There can be a lot of tax advantages to this as well. So again, talk to a professional and see what makes the most sense for your current situation. You do not have to be earning a full-time living as a content creator before you decide to incorporate as a business or treat it like one.
10. How should I separate my accounts in terms of my YouTube business from my finance?
I love this question because it’s something most people don’t think about. When you are conducting any business or business venture, you want to make sure that you have bank accounts separating the business from your personal. You do not wish to blend these finances. You want to create a clear division with these. What I tend to do is this, I have an account that’s set aside just for my taxes, for me to put that money there and also for me to pay the government what they need directly out of that account and touch no others.
I also have an account just for my business where the money comes in for the company. Where I too do any payments and any expenses that the industry has. So whether I’m purchasing equipment, it comes out of that one account, that’s it. If I have freelancers I need to pay, it comes out of that one account.
Then I have my account, my savings, my credit cards, and those things are separate from the business. Anything the business needs comes out of a business bank account or exclusively put on a business credit card. And this is going to help you with clean bookkeeping and make life so much less stressful.
So there you go, ten tax tips you need to know as a content creator. Thanks so much for reading the article, and don’t forget, go out there and create something awesome today. Take care.