YouTube icon

While you won't receive no tax form via mail, the creators of content on the internet must be able to report income from their commercialized content on their tax returns. Although other online stores (like Etsy and Amazon) complicate the tax process by charging excessive costs, they make tax time more manageable easier to access as well as less stressful. This allows you to be focused on the content.

Tax Season Update 1099-Ks

We'll start by defining the basic concepts: What is a 1099-K? 1099-Ks are the forms provided by the IRS that monitor credit and debit card transactions made through third-party networks payment processors. The processors of third parties (like PayPal, for example) are able to report on the transactions they process on behalf of their companies. Therefore, if you're a creator that accepts payments via credit or debit cards you'll probably get an email that includes a 1099-K. So does the IRS. Because the IRS is able to access every single copy of the 1099-K it's crucial to remain transparent in filing tax returns.

Gross Payouts

For those who may not know, gross payments are the sums of money that you get before tax and deductions. In the past, many creators of content did not need to declare their income since the limit for this qualifier was $20,000. But, beginning in 2022 the maximum gross amount for monetizing online content will drop significantly 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're under the $600 mark, it is possible that you don't need to fill out the form 1099-K.

Eliminating Hobby Classification

The Hobby classification occurs where the IRS decides that your company doesn't actually exist as a business nevertheless, it's an activity. Certain creators of content, specifically those who are new to the field of their work, could consider this a good concept. If it's a pastime and I'm not having to be paying taxes, surely? No, absolutely it isn't. You'll be hurt as well as your income if you are taxed if you are classified by the IRS categorizes your business as one of the above.

State Sales Tax

The last thing you need be aware of when getting ready for tax season is state sales tax. This is crucial when you are an online creator because their products are sold worldwide.

Talk to a Tax Professional

While we can offer some helpful tips and suggestions, we don't have the expertise of accountants. The website encourages all creators to get help from tax experts for expert guidance on how to reduce tax costs to avoid tax-related mistakes and make the process of tax-paying easier.

The Tax Season is here! Through

This post was posted on here