Are you a creator?
There are so many new industries that popped up as a result of the pandemic. One industry that exploded is the Creator Economy which includes influencers on TikTok, Instagram, YouTube, OnlyFans, and Streamers. For many influencers, what started out as something fun to get them through the stay-at-home orders is now helping them earn a substantial income.
Whether you’re a TikToker earning money showcasing your favorite dances or you are an influencer sharing the top beauty products on Instagram, we are here to answer some of the most popular questions we hear from creators about their new found streams of income like:
- “Does my creator income from YouTube, TikTok, and Instagram make me self-employed?”
- “When do I have to claim my income from being a creator?”
- “What can creators write off on their taxes?”
TurboTax Premium will easily guide you through your taxes if you are a creator and will help you uncover industry specific deductions related to your work as a creator, but here is a breakdown of what you need to know about your taxes as a creator.
Does my income from creating content for social media or from streaming make me self-employed?
If what started out as a few posts for fun evolved to creating content to make an income, then you are considered self-employed and will need to file your self-employed taxes at tax time. On the bright side, you can deduct so many expenses related to being a creator on your taxes.
When do I have to report my income as a creator?
If you are self-employed as a creator, you need to report your income from your work as a creator. If you earn $400 or more in net income, you will need to file your taxes since this is the point where you have to pay self-employment taxes, which is calculated when you do your Federal taxes. Self-employment tax is automatically calculated by TurboTax Premium when you do your taxes and is the Social Security and Medicare tax paid when you are self-employed.
If you are an employee, you would typically pay FICA tax, which is 7.65% of gross income, and your employer would also pay a matching percentage, putting it at a total of 15.3%. 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 the self-employment tax from your income on your federal taxes. The 15.3% is calculated based only on your net business income, not on your gross 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 a creator?
You will receive Form 1099-NEC if you earn $600 or more or possibly 1099-K if you had over 200 transactions and more than $20,000 in payments processed by a third party provider in 2023.
The IRS announced another delay in the lower over $600 reporting thresholds for third-party settlement organizations (TPSOs) to report tax year 2023 transactions on a Form 1099-K to the IRS or the payee. Some well known TPSOs include Venmo and PayPal. This means that for tax year 2023 (the taxes you file in 2024) the existing 1099-K reporting threshold of the aggregate of more than $20,000 in payments from over 200 transactions will remain in effect. The IRS is currently planning for a threshold of $5,000 for tax year 2024 (the taxes you file in 2025) as part of the phase in to implement the lower over $600 threshold enacted under the American Rescue Plan. Even if you don’t receive a 1099-NEC or 1099-K you should still claim any income earned from your business on your taxes.
What are some of the business expenses creators can deduct?
There are a ton of expenses creators can deduct that can lower their taxes like:
- Website development
- Start-up costs
- Cameras
- Video equipment
- Internet
- Home office
- Supplies
- Car expenses
Check out our free Self-Employed Tax Deductions Calculator to see what other expenses you may be able to deduct.
For even more tips about the Creator Economy, listen to the hosts of our Friends with Tax Benefits Podcast, Kat, Lauren, and Daniel have an in-depth conversation about their personal experiences and perspectives.
What should I do if I still need to file my taxes?
Don’t worry. TurboTax Premium can help you easily and accurately file your taxes and uncover industry specific deductions, whether you are a creator or you are running your own business in another specific industry.
You can also get your taxes done by a TurboTax Live Full Service Premium tax expert who specializes in self-employed taxes. With TurboTax Live Full Service, you can request the same tax expert do your taxes again next year. TurboTax Live tax experts are available year round in English and Spanish.