YouTube icon
If you do not receive an income tax form in the mail, creators of online content are still responsible for reporting the income earned from their monetized content on their tax return. Although other online stores (like Etsy and Amazon) complicate the tax process with unnecessary fees, makes tax season easier to manage easier to access, less difficult, and less stressful--leaving you more time to focus on the content you create.
Tax Season Insight: 1099-Ks
We'll start by defining the basics. What is a 1099-K? 1099-Ks are forms through the IRS that track debit and credit card transactions through third-party network transactions. The processors of third parties (like PayPal, for example) are required to report transactions their company processes. So if you're a content creator who accepts payment through debit or credit cards, you'll likely receive a 1099-K in the mail and so will the IRS. Since the IRS will have access to every single copy of your 1099-Ks, it's crucial to remain transparent when it comes to filing tax returns.
Gross Payments
For those who don't realize, gross payment represent the amount of cash that you receive before taxes and deductions. Up until recently, many content creators did not have to declare their earnings since the minimum threshold for this qualification was the amount of $20,000. In 2022, however the maximum gross amount for monetizing online content has been cut drastically to $600.
With this transition, most online professionals--freelancers, artists, vloggers, and creators--will receive a 1099-K. A helpful tip in preparing for tax season is to record the money you make throughout the year, making gross income easier to file. If you fall under the $600 mark, you may not have to fill out a 1099-K.
Avoiding Hobby Classification
A hobby classification happens when the IRS decides that your company is not really a commercial venture, but a hobby. Certain content creators, particularly newcomers to this area of work, might think it's a good idea. If it's just a hobby and I don't have to pay taxes surely? Absolutely certainly not. It's actually detrimental for you as well as your earnings in the event that you are taxed if the IRS classifies your business as one of these.
State Sales Tax
One final thing to remember in preparing for tax time is the state sales tax. This is crucial for creators who are online since their items are available worldwide.
Contact with a Professional in Tax Professional
While we can offer some useful tips and advice We aren't accountants. Encourages all of our web creators to seek the help from a tax expert for an expert opinion on ways you can save money on taxes, avoid any tax oversights, and simplify the process of paying taxes easier for you.