Content creators and influencers are generally considered self-employed for tax purposes if they are not working for a company as an employee. Generating income independently through platforms like YouTube, Instagram, TikTok, podcast networks, or blogs means creators and influencers must also pay self-employment taxes and file specific tax forms like Schedule C (Profit or Loss from Business).
In addition, self-employed individuals have to make estimated tax payments every quarter since they don’t have federal taxes withheld.
What Tax Documents Do Content Creators and Influencers Receive to Report Income?
Like other self-employed individuals, content creators and influencers need the following documents for reporting income to the IRS on a tax return:
1099-NEC
If a creator or influencer earns more than $600 from a company or other client, they will receive a 1099-NEC that reports how much income they received as an independent contractor. 1099-NEC income must be included on a tax return for the IRS to determine taxes owed.
1099-MISC
While the 1099-NEC has replaced the 1099-MISC for reporting self-employment compensation, the 1099-MISC may be used for other types of “payments” made to content creators and influencers, such as gifts and free products.
1099-K
If a content creator or influencer makes money from third-party payment networks like PayPal or Venmo, they will receive a 1099-K. This form is issued when self-employed individuals earn $20,000 in payments and log over 200 transactions in a calendar year.
The IRS plans to lower the payments threshold to $5,000 for 2024 taxes.
Eventually, all payments over $600 will have to be reported.
Do Content Creators and Influencers Pay Tax on Free Gifts and Products?
Yes, content creators and influencers may need to pay taxes on gifts and products they receive. The IRS typically considers gifts and free products as taxable income under certain circumstances.
For example, if an influencer receives gifts from a company in exchange for promotion or a review, the fair market value of those items is taxable income. The fair market value equals the cost of the item if it was purchased at retail price.
Another scenario in which influencers pay tax on products is if the product (or service) was exchanged for promotion of a company or individual.
Social media videos and posts that promote someone or something are considered “bartering and exchange” practices by the IRS.
Creators and influencers are responsible for reporting this “income” on their tax returns. They may receive a 1099-MISC or 1099-NEC form from the company providing the gifts and products when fair market value meets the reporting threshold.
Remember, you are legally required to report the value of gifts and products as income even if you don’t receive a 1099 form.
What are the Common Content Creator Tax Deductions and Influencer Tax Write-Offs?
Before taking any of these tax deductions, content creators and influencers should have detailed records and receipts for all expenses to ensure they qualify to take full or partial deductions:
Home Office Expenses
If a portion of the home is used exclusively for business, self-employed individuals like influencers may be able to partially deduct expenses like rent, mortgage interest, and utilities.
Equipment and Supplies
Costs for cameras, software, or other items essential for generating income as a content creator can be deducted.
Travel Expenses
Costs associated with business flights, hotels, and car rentals are deductible.
Advertising and Marketing Costs
Expenses for advertising content, promoting social media channels, and paying professional marketers to publicize content are deductible.
Health and Business Insurance Premiums
Self-employed individuals can often deduct medical, dental, and business insurance premiums.
How Much Do Content Creators and Influencers Pay in Taxes?
Since content creators and influencers are generally considered self-employed (unless they form an S corp or multi-member LLC), the amount of tax they pay depends on income (including gifts and products received), business expenses and deductions, estimated tax payments made during the year, and other factors.
The self-employment tax rate on net earnings is 15.3%. Depending on geographical location, creators and influencers may also be subject to state and local taxes that must be paid in addition to federal taxes.
Need more help? You can start online by answering 6 simple questions. You can also call us at 866-568-4593.
6 Simple Questions. Free Evaluation.
Join our Newsletter
Enter your email address to join our free newsletter. Get all the latest news and updates.