Am I Going to Get Audited by the IRS? A Guide for Content Creators

“Am I going to get audited by the IRS?” We get this question from content creators and influencers ALL THE TIME. It’s completely normal for content creators and influencers to worry that they’re going to make a mistake that will alert the IRS. It’s okay. Take a breath. We’re here to help.

An audit is never fun, but it doesn’t have to be something to fear. Here are some common questions and answers about tax audits so you can be prepared for anything that comes your way.

What Triggers an IRS Audit?

First, let’s clear up a myth. Getting audited doesn’t always mean you’ve done something wrong. The IRS randomly selects some tax returns for review, but others are flagged based on certain patterns. Here are a few things that might increase your chances:

• Unreported Income: Platforms like OnlyFans, YouTube, Twitch, and Patreon report your earnings to the IRS. Payment processors also report income if you reach certain thresholds. If you don’t report all your income, that’s a red flag.
• Large Deductions: Claiming big deductions compared to your income might make the IRS take a closer look. For example, writing off a $10,000 camera on $30,000 of income could raise questions. If you have an expense like that, you may want to write off a portion over a period of years (that is called depreciating property, and our team at Cookie Finance is happy to help you calculate that).
• Consistently Reporting Losses: If you report a loss year after year, the IRS may suspect your business is actually a hobby. Being classified as a hobby means you can no longer claim tax deductions on your tax return. Those deductions play a crucial role in lowering your taxable income!
• Rounded Numbers: If all your expenses end in zeros ($500, $1000, etc.), it looks less like real tracking and more like guessing. The numbers matter, so be sure to get them right!
• Cash Payments: If you primarily receive payments in cash (like tips or off-platform payments), the IRS might want proof you’re reporting everything correctly.

What Happens if I Get Audited?

You’re likely imagining the IRS showing up at your door to arrest you, but don’t worry! It doesn’t actually work that way.  During an audit, you’ll need to provide documentation and clear information about your income and expenses.

Here’s what happens through 3 different audits:

1. Correspondence Audit: With this type of audit, the IRS sends you a letter asking for documentation (like receipts or bank statements) to support certain deductions or income. Correspondence audits have become the most common type of audit recently.
2. Office Audit: You’ll be asked to visit an IRS office to discuss your taxes in person and bring the necessary documents.
3. Field Audit: A rare, more serious audit where an IRS agent visits your home or business to review records. This is the type of audit that you’ve probably seen in movies or TV shows, and those are much more dramatic than any audit is likely to be in real life.

How to Reduce Your Audit Risk

The best way to avoid an audit is to keep accurate records and file your taxes honestly.

Report All Your Income: 

Content creators and influencers earn their income from a wide variety of sources. That’s great because you’ve diversified, but you are also responsible for tracking it all! That means 1099s from YouTube, Twitch, and TikTok, brand deals and sponsorships, and even those tips on Kofi!

Please note, that even if you don’t get a 1099 from a platform, you still have to report that income! There is a lot of misleading information that says you don’t have to report income under a certain amount. That’s just not true. Even if you made $5 on Etsy, you’ve got to report that as income.

Track Your Expenses:

Business expenses, write-offs, tax deductions. These words all mean the same thing! They are expenses you incur for your business that lower your taxable income. As a content creator, your expenses can be pretty unique and there are a ton of them to keep track of! But we’ve got a sweet deduction cheat sheet to help you out with the basics.

The best thing to do is to maintain a spreadsheet that tracks your income and expenses. Made $500 on Patreon this month? Add it to your income. Spent $200 on a new microphone for your new podcast? Add it to your expenses. At the end of the year, you have a clear picture of how much you made, and more importantly, how much money you SPENT in order to make that money.

The money you spend on your business is a tax deduction! Keep records to prove you spent that money! That means, receipts, bank statements, whatever is easiest for you. Need help getting started? Try out our free income and expense tracker!

Separate Business and Personal Finances:

Okay, this one is actually a life hack. Opening a separate bank account for your content creation business is an amazing way to keep your business and personal finances separate. Running all your income and expenses through a business account takes out the heavy lifting of tracking it on your own.

Our biggest tip to remember is that mistakes happen so it can still be worth your time tracking your income and expenses outside that account. Sometimes you use the wrong card at the store and a personal purchase slips into your business account or vice versa! It’s still a lot easier to fix one mistake than go through a year’s worth of transactions separating business and personal during tax season.

Be Realistic with Deductions: 

Writing off a luxury car or boat is a huge red flag to the IRS. Write off expenses that are directly related to running your business. A portion of your rent for a home studio? Yes. Travel costs for a conference you attended? Totally! The editor you paid to finish up your YouTube videos? Those are all legitimate write-offs!

Work with a Tax Professional:

Finally, we know this can feel incredibly overwhelming. That’s where hiring a pro who understands your line of work is so beneficial. Yes, we’re inserting our shameless plug here. Bookkeeping, accounting, and tax help is what we do here for content creators just like you. Book a call to see how we can work together.

What If I Owe Taxes?

If you realize you’ve underreported income or made a mistake, don’t ignore it. The IRS offers payment plans and ways to correct past tax returns. Taking action early can prevent penalties from piling up. There’s no need to panic, there’s always a path forward to get your finances in a better place.

Conclusion

Audits aren’t as scary as they sound, and most content creators never face one. The key is to stay organized, report income accurately, and only claim deductions that make sense for your business. That way, if you do get audited, you will have all the information you need to get through it. If you want more support, book a call and we’d be happy to chat!