Is the internet a "tax-free" zone?

June 12, 2022
Q&A

Yes. And absolutely not.

As a general rule of thumb, if you receive any sort of income, it has to be reported when you file taxes. Failure to do so can result in penalties, fines, and sometimes even jail time..

For the example above, YouTube is required to work with IRS to gather necessary tax info from creators. When you enter the YouTube Partner Program, you should be prompted to provide your tax information, which would similar to how a freelancer has to fill out a W-9 form when working with clients.

YouTube will then take the information that you provided, apply it to the revenue you earn on the platform, and then send you a 1099 form at the end of the year to your address on file. That information is then used to help file your overall tax return.

If you don't give YouTube your tax info, they will typically withhold 24% of your earnings.

Because your individual tax rate will vary, this 24% may be more than you should actually be withholding.

For example, if you're single and earn less than $41,755 in 2022, your tax rate is only 12%.

Or on the flip side, if you earn over $170,000, your tax bracket jumps up to 32% and the standard 24% withholding wouldn't be enough - meaning you may have to come up with extra funds come April to cover your tax bill.

Because taxes are complex, and tax law varies from state-to-state and country-to-country, I highly recommend working with an experienced tax professional (CPA or EA) to make sure that everything is being reported and filed properly.

The cost of tax prep & filing is negligible compared to the tax savings and potential mistakes that it can help avoid.

View Google's Guide to Submitting Tax Info

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Treyton DeVore

Treyton is a creative entrepreneur, writer, and financial planner.

He's been featured in Morning Brew, NerdWallet, Marketwatch, and more.

treytondevore.com

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