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Even if you don't receive any tax forms in the mail, creators of online content must still report earnings from content that is monetized on tax return. While other e-commerce sites (like Etsy and Amazon) can make tax reporting more difficult by imposing unnecessary fees, makes tax season easier to manage easy, accessible and less stressful--leaving the time for you to concentrate on the content.
Tax Season Insight: 1099-Ks
Let's start with the basics. What exactly are 1099-Ks? 1099-Ks are forms through the IRS that monitor credit and debit card transactions that are processed by third-party network payments. Processors that are third-party (like PayPal, for example) will report the transactions that their business processes. So if you're a content creator who accepts payment through debit or credit cards then you'll most likely get a 1099-K in the mail along with the IRS. Since the IRS will be receiving every one of your 1099-Ks it's crucial to remain transparent when filing taxes.
Gross Payments
For those who don't know, gross payments are the sums of money you make before taxes and deductions. Until recently, many content creators did not have to declare their income--since the threshold for this qualifier was $20,000. In 2022, however, the gross payment to monetize online content has been cut drastically to $600.
With this transition, most online professionals--freelancers, artists, vloggers, and creators--will receive a 1099-K. A helpful tip in preparing for tax season is to record the money you make throughout the year, making gross income easier to file. If you fall less than the threshold of $600 it is possible that you don't need complete a form 1099-K.
Avoiding Hobby Classification
A hobby classification happens when the IRS finds that your enterprise is not really a commercial venture, but a hobby. Some content creators, especially newcomers to this area of work, might think it's a good decision. If it's a simple hobby you can't tax me surely? Absolutely certainly not. Actually, it's harmful for you as well as your earnings when you are taxed if the IRS considers your company to be an entity that is classified as.
State Sales Tax
Another thing to be aware of while preparing for tax season is state sales tax. This is particularly important for creators who are online since their product is sold globally.
Consult with a Tax Professional
We can provide advice and helpful tips but we're not accountants. Encourages all of our web creators to seek out the assistance of a tax professional for an expert opinion on ways you can save money on taxes, avoid any tax mistakes, and help assist in tax-paying easier.