Are there any special taxes for profit from YouTube in selected countries? Will I make the same money as someone in any other place in the world?
If you take your YouTube channel seriously that means you’re a business owner, a title that comes with a heavy load of responsibilities. This role involves some tasks that are not as fun as creating content, such as taxes and filing 1099s for independent contractors who have worked with you over the past year.If you’re new to the world of 1099 forms, then tax season can be very confusing. The key thing to understand is by filing 1099s you save money and the deadline is now. Yes, you can save so much money that the money saved is enough to go toward building your business like renting green screen space or an additional editor. So, let’s get a better grasp on how to make sure the money you worked so hard to make stays in your bank account rather than floating over to the government.Let’s Define Our TermsAn independent contractor is a self-employed individual who offers services to your business. Editors, animators, photographers, film crews, production companies, lawyers, agents, managers, assistants and even other YouTubers all fall under the 1099 category.A 1099 is a form that documents precisely how much money a business or organization has paid to an independent contractor. A salaried or hourly employee who’s on the company payroll doesn’t typically require a 1099 form. The general rule is that if taxes are withheld from the individual’s paycheck, then there’s no need to file a 1099. If you are at a loss about whether you’ve withheld taxes, then you probably need to file 1099s.According to the IRS, you must file a 1099 form to:Anyone who has received over $10 on royalties;Anyone who has received at least $600 in rent, services, prizes, awards and income payments;Anyone who has received fishing boat proceeds; orAn attorney who has received gross proceeds of $600 or more.So what happens if you fail to file for the contractors your business has paid throughout the year? Well, the penalty can be significant.The DeadlinesThe IRS has the power to completely ignore and disregard all expense deductions that you’ve filed on your (or your company’s) tax returns. Although the deadline to mail the 1099’s to the recipients was Jan 31, it is still a good idea to prepare them because it is likely the expense deduction will outweigh any potential penalty for filing late. Keep in mind, the portion you have to file with the IRS is due by Feb 28 if filing manually and Mar 31 if filing electronically. As a courtesy to the contractors it may be in your best interest to inform them that the 1099’s are on the way in case they are preparing to file their tax returns.How The Tax Man Can Help YouExpense deductions are money you spend day to day on your business to grow your YouTube channel. These expenses are called ‘write offs’. Write offs are deductions from your total income for the year before it’s taxed so you end up paying less in taxes. Let’s break it down.Have videos about makeup? Then you can write off’ your makeup purchases and even having your hair styled for the video! Need a website to start selling merch for your channel? If you hire a freelance web designer that service is a deductible expense. For a larger business, this can result in big savings.An average YouTube star with a profitable channel who handles this properly can save thousands, if not tens of thousands of dollars a year. Seriously. To be clear, you don’t receive a check for this money, you get to keep your own money that you made rather than mail a huge portion of it away in a check to Uncle Sam.Let’s say you have all your information together and it looks like you owe about $10,000 in taxes and then you or a savvy accountant goes through your books and finds an additional $3,000 in expenses that you didn’t account for when you initially did the books. Let’s also assume you’re in a tax bracket that is taxing you 30%. So, out of the $3,000 dollars they found in expenses you’ll save $900 on your tax return.For more and accurate info about in and out of YouTube, visit SushiVid Blog