Self-Employment Tax Guide for Content Creators in the USA

Social media platforms have transformed the way we live and paved the way for the growth of an influencer community. Monetization has further influenced more people to take this up as a full-time career. Influencers have a reputation and expertise in their subject, which provides them with an edge. Many of us see the gifts and prizes social media influencers receive and feel overwhelmed, but we are unaware of what goes behind them and how they deal with self-employment tax. Whether you are a creator or a social media influencer, you will have to oblige and pay self-employment tax since every income is taxable. Here is a guide to help understand the filing of self-employment taxes and influencer taxes in the USA.

Do Social Media Influencers Have to Pay Taxes?

Many people have this dilemma and are not clear on taxes. You should be aware that social media influencers will have to file and pay self-employment taxes. This form of tax is paid by independent contractors, freelancers, and sole proprietors on their net earnings to fund medicare and social security. Not reporting these taxes can be counted as a crime, and you may be charged with violating the law. There are also chances of imprisonment for failure to pay taxes. As a social media influencer, you will have to pay taxes if you are earning well from the platforms. You may contact a tax professional to understand the structure and determine your taxes.

Tax Forms for Influencers

Salaried employees have to bear the deductions from their salaries. Besides this, the companies will ask them to fill out the W-4 form, and the employers will look after the taxes. On the other hand, there will be no deductions applicable when you are working as an independent contractor. As a result, you will be required to take all the initiatives and fill out self-employment tax on your own.

You will have to fill out the W-9 form to declare your information for tax purposes. Even if you are not doing social media influencing full-time, you are still obliged to fill out this particular form. If you earn more than $600 from a particular client, you will receive a form 1099-NEC from each of the partners. If the earnings are less than $600, you may consider reporting them to the previous form. No matter what the platform of earning is, you would receive the 1099-NEC form if the earnings are beyond $600.

Do Content Creators and Social Media Influencers Pay Taxes on Gifts?

Many influencers receive multiple gifts on an everyday basis. You may consider informing and mentioning the gifts in the tax declaration. You will not be required to include the value of items that were less than $100. Make sure that the gifts have been sent for review to exempt them from the tax declaration information.

You should even refer to state laws and check if there are any specific state requirements for self-employment tax. Here are the taxable income types under the self-employment tax law.

Earnings from YouTube and Facebook ads
Money generated from selling your branded merchandise
Money generated from sponsored posts, and paid collaborations

What Content Creator Expenses to Write Off on Taxes?

There are various self-employment tax deductions applicable that you can consider from the final tax value. Understand that being an influencer is not an easy job. From editing software to filming equipment, you will have to invest in multiple things. Here’s a list of the content creator expenses that you can write off from your taxes.

Computers, smartphones, tablets, and other electronic equipment
Cameras and other filming equipment
Amount spent on editing software
Advertising and marketing costs for promotions of profile
Website and emailing services
The amount dedicated to stock photography and subscriptions
Trademark and copyright fees
Home office space and supplies, if you are operating from home
Utility bills and Property Insurance
Travel costs
Mileage costs

Note: The IRS may not allow you to deduct the expenses if you are not well-established as an influencer. There are chances that they may consider your influencing journey as a side gig. First, you must understand whether your influencing and content creation is labeled as a hobby or a job.

What if there is a Loss?

There can be instances where the deductible expenses may outpace the monthly earnings. You must note that showing and reporting a loss in self-employment tax is acceptable. However, a graph of consecutive losses can make the IRS consider your work as a hobby. You should take steps and show a profit in your earnings. The IRS will consider the amount you spend on your work and decide whether you are capable of earning profits in the future.

Similar to businesses and professionals, influencers should also adhere to deadlines. Failing to make the self-employment tax payment before the deadline can lead to a penalty. The estimated tax deadlines are usually June 15, April 15, January 15, and September 15. You may consult an experienced tax consultant for assistance related to this matter and file your self-employment tax on time.