Do Social Media Influencers Pay Taxes?
By Jaden Miller , August 16 2020
If you're a social media influencer who is starting to earn a living off of your audience, you may be wondering if influencers file taxes. Is filing taxes as an influencer difficult? What do you need to know to do it correctly? Filing taxes as an influencer doesn't have to be as complicated as you may think! Here is a short guide to help you file as a social media influencer so that you get it right the first time. Keep reading to learn more.
A Guide To Filing Taxes As An Influencer
As a social media influencer, you may be asking yourself: what counts as income for influencers? If so, is filing taxes as a social media influencer necessary? Do influencers pay taxes? The short answer is yes. Social media influencers do pay taxes. Depending on the type of influencer that they are, will depend on what they count as income.
Believe it or not, there are a lot of positives with paying taxes as a social media influencer that the average worker doesn't have. That is because influencers are self-employed. Becoming self-employed entitles them to tax deductions. That means they can write-off expenses that ordinary workers cannot.
Four Items Every Influencer Must Report on their Taxes
According to the guidelines given by the IRS, things that you must report on your taxes as a social media influencer are:
- Brand Partnerships - If you have received money from a brand in the form of sponsorship, as income.
- Products - If you receive products from brands to review, shout out, or promote, you must claim these products as income.
- Sponsored Posts - If you receive money from a brand for a sponsored post, that's income.
- Ad Revenue - If you receive money from ads, that is income.
While it's not a comprehensive list, it's a good starting point for understanding what you may need to claim when you file your taxes. It is good practice to keep records of any of these four items when it comes to your self-employed status.
What Does It Mean To Be Self-Employed?
As a social media influencer who is earning money for a service, you are considered self-employed, even if you only do it part-time. If you make more than $400, you are self-employed. Before you become nervous about filing taxes as under the self-employed status, you should know that many advantages come along with paying taxes under the self-employed status.
Benefits Of Filing As Self-Employed!
Most people who file taxes work for someone else. Therefore they receive a W-2. It shows their earnings for the year and the taxes paid from paychecks. As a self-employed business owner, you'll file a 1099 form. What's different for the self-employed person is the term net income. The net income is what a self-employed person gets taxed on.
What Is Net Income?
Net income is the amount you have earned over the course of the year after all of your earnings for the work you have done, minus all of your expenses. Once you counted up all your earnings, then subtracted all of your expenses, you get your net income. So, you could earn $60,000 per year, but your expenses are $20,000 per year, your net taxable income would then be $40,000.
That is a huge benefit for self-employed workers because many items can qualify as expenses for your business.
What Are Expenses? - In A Nutshell
As a social media influencer, you may have a lot of expenses. Anything that you pay out of pocket for your business (within reason) can be an expense or said another way—a deduction. Do you run your social media channel out of your home? Do you have a designated office space where you shoot your videos? That area is a deduction.
Do you travel as a social media influencer where you are reviewing different spots around the world and hotel accommodations? Any expense you pay for out of pocket is a deduction. Any transportation that you use on that trip to get from place to place? Deduction. The food you paid for in fancy restaurants while on that business trip? Deduction.
Have you purchased new software or hardware for your channel? Deduction. Did you purchase a course to learn more about social media influencing? Deduction. Do you see how this all adds up? You could be earning the same as your friend per year, $60,000. Their gross income becomes taxable. Your net income becomes taxable, meaning you pay less in taxes. BIG advantage!
Three Ways To File Like A Boss
Now that you're aware that there are many advantages to filing as a self-employed business owner, there are a few things you are going to want to keep in mind. Here are three ways to file self-employed like a boss:
- Keep Impeccable Records - Make sure you hold onto and track your receipts, bills, and expenditures. Keep them in a file and organize them. That will ensure smooth tax filing.
- Pay Your Estimated Taxes - A self-employed entrepreneur, you can pay your taxes quarterly, making it easier to stay current on what you owe.
- Know Your Deductions - Some of the biggest deductions for self-employed influencers like yourself are home office, mileage, meals, electronics, and travel, to name a few.
Keep these three things organized and you're on your way to easy self-employment filing.
Filing Taxes As An Influencer Doesn't Have To Be Difficult
Filing taxes as an influencer doesn't have to be scary. There are loads of information out there to help you learn how to budget, file, and live a self-employed lifestyle. If you are looking for more ways to save money as a social media influencer or how to file with ease as a self-employed business owner, check out our blog for other useful information, otherwise, let's get you started on proving your income.
Generate your own paystubs right here, easily and hassle-free!