In America, taxes are due every April - typically around the 15th.
Starting in January, companies & brands start sending out relevant tax forms that show how much they paid you throughout the previous year.
Since the standard deadline to send them out is January 31st, you should receive documents from anyone who paid you more than $600 last year well ahead of time.
Tax forms from YouTube may be slower to arrive so if you haven’t received everything yet, it’s okay.
We’ll talk about it in this article:
For starters, let’s get an understanding of how taxes work when you’re self-employed.
In the eyes of the IRS, if you earn money that doesn’t come directly from an employer—even if you don't have an established business—you’re considered to be self-employed.
This is the first key difference between YouTube taxes and taxes on income from a 9-5 job.
When you’re working for someone, they essentially pay taxes for you. Money is withheld from every paycheck before you get it and they periodically send it to the IRS during the year.
But when you’re self-employed, you play the role of the employee AND the employer. This means that every time you get paid, you’re responsible for setting aside money to pay taxes.
However, being a YouTuber makes this a little bit more complex.
Because in some instances, Google may be required to withhold some taxes for you:
But in most cases, YouTube isn’t withholding taxes on your behalf so you’re responsible for doing so:
Since all creators have to submit tax information when applying to the YouTube Partner Program, Google gets what they need to report your earnings to the IRS.
This means that you need to report all income you earn from YouTube on your tax return and pay any necessary taxes.
Because YouTube isn’t withholding taxes from every paycheck like an employer, the IRS wants people like us to pay tax “quarterly”. They don’t want to wait until every April to get all of our self-employment taxes.
So if you expect to owe more than $1,000 in taxes in a year, you’re required to pay what’s called “estimated taxes” each quarter.
It can be tough to get an accurate estimate—and we talk more about it below—but the important part is that you’re aware of this.
For example, every time money lands in my business bank account, I have an automation to pull 25% of the money into a separate tax account.
Then each quarter, I’ve already set aside my taxes and can pay them to the IRS.
Here’s the 2023 estimated tax due date schedule:
Further reading: How to Know If You Should Make Estimated Tax Payments
You’ll need to do your own calculations to figure out what the appropriate amount to set aside is.
And I promise that simply by being aware of your tax responsibility and knowing to set aside some of your income, you’ll be in a much better (and less stressful) spot come tax time.
And this applies to anyone who’s earning 1099 income, not just YouTubers.
To help get an understanding of your tax situation, you can use a tax calculator to get a rough idea of what you may owe.
Let’s break down an example using Colin & Samir’s income from 2022:
Last year, they made $268,010.19 from YouTube AdSense according to a recent video.
Based on an estimation, before any deductions, they may expect to owe $68,000 in tax on $268,000 of income:
Now, this calculator doesn’t take into account all state taxes or every piece of your financial picture, but you can use it as a guideline to get going in the right direction.
I like to project my income for the year and run the numbers through the tax calculator to see what my total liability may be.
If you live in a high tax rate state, such as California or New York, it’s typically recommended to set aside upwards of 30-40% for taxes
But let’s say that $68,293 was an accurate tax liability for their gross income in 2022.
If they paid $50,000 to contractors and spent $50,000 on new equipment and travel to record new interviews, they could “write off” those expenses to owe less in taxes.
With $268,010 of income and $100,000 worth of write offs, their taxable income would be reduced to $168,010.
This is what that tax breakdown would look like:
By writing off $100,000 worth of expenses, they reduced the tax liability by roughly $24,000.
This is important because it shows how tax write-offs actually work.
A write off doesn’t make an expense disappear. It just reduces your income which means you pay less tax in your current bracket. For example, if you were in the 24% tax bracket and you had a $100 write-off, it would save you $24 in tax, not $100.
Tax write-offs (also known as “deductions”) are a powerful piece of tax planning. You don’t want to leave money on the table, so I created a graphic that breaks down some common deductions that YouTubers can take advantage of to lower their taxes:
For an expense to be considered deductible, it must be "ordinary & necessary" for your business.
Primarily, this will depend on where you’re located and the type of income you received.
As noted from Google (below), creators outside of the U.S. should receive Form 1042-S that outlines your income and tax withholdings - while U.S. based creators would likely receive a Form 1099-MISC:
Remember - if you earn other income (outside of direct payments from Google), you’ll also need to keep track of it and report it on your taxes.
For example, if you signed a $5,000 brand deal last year, the brand should have asked for a Form W-9 (which gives them your tax information) and they should have sent you a Form 1099 by January 31st. You’d take that information and report it on your tax return.
If you didn’t get a 1099, you still need to report that income. It isn’t your responsibility to send the form (and the business may get penalized for failing to do so), but it is your responsibility to pay taxes on the income regardless.
If you worked at a full-time job and created videos on the side, you’d just report the YouTube income alongside your W2 income on your tax return, after calculating any deductions.
My best advice is to work with an accountant, either a CPA (Certified Public Accountant) or an EA (enrolled agent). Not all accountants will be well-versed in your unique situation as a creator, so be sure to do some due diligence before signing an engagement letter to work with them.
You could start with a simple Google search of “accountants for creators” or “CPA for youtubers” and go from there - or ask some other YouTubers who they may have used in the past & their experience with them.
To get an idea of the cost of working with CPA, you may expect to pay anywhere from $250-$1,500+ for tax filing depending on the complexity. This year, I’m paying $600 for two businesses, a nonprofit, and my personal filing. It’s a smaller, local business, they answered the questions I had, and I like the way they operate.
If you don’t want to work with an accountant, you can file on your own with one of the many tools out there - like TurboTax or the IRS’ free filing service.
If you make enough money that your taxes are too complex to figure out, it’s worth it to hire an accountant. Ideally, they’ll save you enough in taxes, errors, and peace of mind that the investment far outweighs the cost.
Taxes are due April 18, 2023 and if you're not able to meet the filing deadline, you can request an extension until October. However, any tax liabilities would still be due in April - only the paperwork is given an extension. It's odd, I know..
Whether you have an LLC or you’re operating as a sole proprietor (meaning you haven’t set up a business yet), you can write off business-related expenses in relation to business income.
For example, if you made $15,000 last year from YouTube and you spent $1,000 on a camera that you use exclusively for recording videos, you can most likely write off the full $1,000. This means that you’d then only owe tax on $14,000 instead of $15,000.
Of course, there are many other deductions that may apply to you and your business, so you may be able to reduce your taxable income even further. The biggest thing to keep in mind is that for an expense to be considered deductible, it must be "ordinary & necessary" for your business.
Further reading: 10 deductions for US-Based YouTubers
The answer is a resounding yes.
Even if you only made $50 from AdSense and you don’t get a 1099 from YouTube, it still needs to be reported as income when you file your taxes.
If you fail to report income, “the IRS may impose an accuracy-related penalty that's equal to 20% of your underpayment.”
For small amounts, this isn’t a huge deal - but if it happens for several years and you’re making good money, the penalties will be substantial.
For a different perspective & explanations of YouTube taxes, check out Roberto Blake's explainer from 2020:
Disclaimer: This post should not be considered tax advice. All content is solely for educational purposes.