When you first find out you have to pay taxes on all the money you made from content creation, the stress is real. Is the IRS going to come after me? How much do I owe? How do I even pay taxes as a content creator?
Tax season can be scary, especially for creators who are new to running a business. The good news? Once you understand the basics, it becomes much easier to manage.
This guide breaks down new creator tax basics and helps you master your financial setup. From your LLC to your business bank account, we can help you get everything working together seamlessly so you can save money!
Understanding Content Creator Taxes (and Why They’re Different)
When you are a content creator, no one is withholding taxes from your payments. You are self-employed, which means you are responsible for setting money aside and paying the IRS yourself.
The first step is to understand what taxes you owe. This answer varies for every single creator depending on where you live, how much you earn, and even your marriage status. These are the basics you need to know:
Federal Income Tax: This tax rate varies based on your income and your filing status. Depending on how much you earn, you will fall into different brackets that will affect how much you owe. The brackets also differ if you are filing single or married filing jointly.
The important thing to note about Federal Income Tax is that everybody has to pay these taxes. Of course, if you don’t earn enough, you may not owe any taxes. However, even if you don’t earn enough, you still HAVE to file a tax return.
State Income Tax: The tax rate differs from state to state. There are even states that have zero state income tax. People who live in states like Wyoming, Florida, or Nevada don’t have to pay any state Income Tax.
If you live in a state with State Income Tax, you are definitely required to pay. Once again, the amount you pay will depend on the state and your local taxes.
Self-Employment Tax: This tax rate is a set 15.3% and it goes toward Social Security (12.4%) and Medicare (2.9%). Everybody has to pay this tax and it is unavoidable. This is by far the most surprising tax for every creator because it is a huge chunk of your income.
When working a W2 job, your work contributes half of your self-employment tax. You only have to pay the other half which comes out to 7.65%. As a content creator, you are self-employed and you are both the employer and the employee. So you have to pay 15.3%.
Now that you have information on the potential taxes you owe, this is where your financial toolkit for creators really pays off. The better organized you are, the easier it is to stay compliant and avoid stress.
How Much Content Creators Should Save for Taxes (25–30% Rule)
Most creators should save about 25 to 30 percent of their income for taxes. Pro tip: putting the money you set aside in a high-yield savings account helps it grow a little while you prepare to pay quarterly estimated taxes (more on that in the next section).
We’ve found that most creators are able to cover the majority of their taxes by saving 30% of their income. It’s best not to touch that money at all. Set it aside immediately because it’s not yours. Without the savings, you can find yourself scrambling to pay the taxes you owe when tax day finally rolls around.
Want to make payments even easier and less stressful? That’s where quarterly estimated taxes come in.
Everything You Need To Know About Quarterly Estimated Taxes for Creators
Because your income is not taxed automatically, the IRS wants you to pay four times a year. Quarterly estimated taxes are payments you make throughout the year that go toward your tax liability. You make smaller payments and avoid a surprisingly big payment on tax day.
While it’s not required to pay quarterly estimated taxes, there is a huge incentive for doing them. The biggest one is that you avoid any penalties or fees that the IRS can tack on for not paying throughout the year.
It can be hard to estimate your quarterly estimated taxes. You have to predict roughly how much you’ll be earning in the entire year. This is especially hard for new creators because they don’t have historical earnings to work off of. Tracking your income and expenses is crucial to do this accurately.
Cookie Finance helps creators calculate quarterly estimated taxes and submit these payments on time so nothing slips through the cracks. We handle the bookkeeping for creators and track the numbers, so all you have to do is send the check on time!
Lowering Your Tax Bill with Creator Write-Offs
Write-offs are your best friend as a creator. They are business expenses that reduce your taxable income. Content creators and influencers often have unique expenses because their work is so closely tied to their personal life.
The lines between business and personal can often blur, but a good rule of thumb is to determine if an expense is an ordinary and necessary part of your business. If the purchase is made specifically for your content, it can potentially be deductible!
Here are a few examples of creator write-offs that you can add to your expense tracker:
- Cameras, microphones, and lighting
- Software like Adobe Creative Cloud or Notion
- Studio space or home office setups
- Travel, meals, and production costs
- Internet, phone bills, and utilities (business use portion)
We’ve made this free Content Creator Deduction Cheat Sheet that lists the most common deductions that every creator can take. Keeping these organized through monthly creator bookkeeping helps you maximize your savings.
The Power of Monthly Bookkeeping for Influencers
Consistent bookkeeping is the heart of creator money management. When you track your expenses regularly, tax season becomes simple. You already have everything categorized and ready to report.
Cookie Finance offers a free Income and Expense Tracker that helps you stay organized, track income, and prepare for tax time all year long.
Simplify Your Content Creator Taxes with Cookie Finance
Taxes do not have to be stressful. With Cookie Finance, you get tools and guidance that make finances for content creators simple, transparent, and stress-free.
Get your creator financial toolkit started today and take control of your money before tax season sneaks up. If you want more help, we’re always here! Book a call with us, and we can chat about your needs!