Updated: Oct 15, 2023
The role of content creator is relatively new, but that doesn’t mean it doesn’t pay well. Content creators can ink lucrative deals with partners, build thriving brands, and enjoy rewarding careers.
The role of “content creator” is relatively new, but that doesn’t mean it doesn’t pay well. Content creators can ink lucrative deals with partners, build thriving brands, and enjoy rewarding careers.
Of course, there’s the challenge of dealing with content creator taxes. The IRS classifies you as self-employed, but with multiple streams of income, wide-ranging expenses and deductions, and an ever-evolving industry, it’s challenging to keep up with everything you need to know.
We’ll explore what content creators need to know about their tax situation.
Taxes are rarely simple, but content creators face unique hurdles that other professionals do not. Part of this is because they deal with multiple revenue streams, including ads, sponsorships, merchandise sales, and more. Each revenue stream adds complexity and comes with different tax implications.
Then there’s the issue of being self-employed in the eyes of the IRS. This means content creators are responsible for more taxes because there is no employer to pay a percentage of them. Self-employed professionals should also file their taxes quarterly rather than annually.
While dealing with taxes as a content creator is complex, we can break it down into three primary steps:
Interested in keeping more of your hard-earned money and giving the government less? It’s all about claiming the right tax deductions. As a content creator, you have access to a wide range of different deductions, although each situation is unique. Speak with a specialist to determine which deductions apply to you. Below, we’ll explore some of the most common options.
You need a place to work, and for most content creators, that ends up being space within your home. The good news here is that you can turn this to your advantage with a home office tax deduction.
To qualify, you must regularly and exclusively use this space for your business. That doesn’t mean that you cannot use that space to make a personal phone call, but it should be primarily the place where you do business. So, if you have a living room that serves as both a workplace and a place for the family to watch movies together, it will not qualify.
How much can you get as a deduction? Under the simplified IRS rules, you can deduct $5 per square foot, up to 300 square feet. So, a home office that measures 200 square feet would give you a deduction of $1,000 on your taxes. Another method is to figure out what percent of your home is dedicated home office space and to deduct that percent of your rent and utilities. This method usually gives you a larger deduction.
You’ll need a wide range of equipment to operate your business, depending on what you create. This can include laptops and computers, sound equipment, lighting, cameras, and a great deal more.
Almost all of the equipment you purchase that is below can be written off immediately. However, major investments (like a car) may need to be depreciated over several years to get the maximum value. Depending on the type of equipment and the amount of the write-off, you may choose to designate it as Section 179 property, which includes a car that was acquired for business use, and acquired by purchase, rather than lease.
Save the receipts for each equipment purchase and notate any relevant information about its use or purpose for your business.
Depending on your business model, you may need to travel as a content creator. If you’re traveling specifically for business needs, you can write these costs off on your taxes. That includes:
Keep all records of travel-related expenses and note how they relate to your business.
It’s important to get your taxes right the first time, and that requires knowing a few pitfalls and how to avoid them.
Typically, if you earn income outside of traditional employment, such as a 9-5 job where you collect a paycheck, you’re considered self-employed.
The fair market value of gifted items or services counts as taxable income. It’s crucial to document and report these. However, this only applies in situations of barter. If a brand gifts you something with no strings attached, you do not have to report it as income.
Some startup expenses can be deductible, even if they occurred before you began earning income. However, specific rules apply, so consult a tax professional.
You must report income from all sources.
Proactive tax planning and organization are critical steps for content creators. However, it can be very complex, particularly if you have multiple revenue streams or need to depreciate the value of an asset over time. Unfortunately, missteps here can have significant ramifications. If you’re not sure of your ability to accurately deal with taxes, seek professional guidance from a specialist with deep experience in the industry.