There are so many avenues of income available to influencers and online creators these days and we only expect that list to grow. On the one hand, it’s cool because it means you’ll never be entirely dependent on one line of income. If one drops out, you’ve got other methods you can turn to. But are you clear about which of those revenue streams count as taxable income for content creators and which don’t? (Hint: mostly they are all taxable.)
We’re going to break down the obvious (and the not so obvious) income streams so you’re not caught by surprise during tax season. No one wants that, so let’s get ahead of the curve now.
Typical (and fully taxable) content creator income streams.
Subscriptions to your membership sites (like Patreon or OnlyFans).
This is where your audience subscribes to a platform to see your content; you make income off of that subscription fee.
This is when you’ve gained enough traffic from viewers that companies want to pay you to use space on your page (say, YouTube) to advertise their products to those viewers.
When you get paid by a streaming service for the amount of times your content has been streamed through their service. Think live shows, a podcast or listeners streaming your music.
Brand deals, sponsored posts, and partnerships
When a company pays you to use their products in your content. They’re paying for your brand’s seal of approval on their product or service.
This is when companies pay you to use your intellectual property. Think music, art, and some products and services. They’re buying your permission to use what you’ve created.
Other sources you might not know are taxable income, but definitely are.
Whether you sell your merch in person or online, this income is 100% reportable. We’re talking about income tax here but depending on state by state laws you might also have sales tax to consider. This is definitely one to chat with your CPA about.
Make sure to report any income you make from affiliate links you’ve attached to your content. There are handy tracking tools you can use if you need help following the data (just ask Google).
The term “donations” may sound like it would be free from taxation but…nope. Unless you’re a registered 501(c)(3) nonprofit, it doesn’t matter whether you or the giver call it a “donation.” It’s going to be considered taxable income by the IRS.
In-kind income #gifted
The type of payment where people give you stuff for “free”. Think products, tools, services, subscriptions. In return they might hope you review their product or promote them in your content (hence the “free”). The value of all the stuff you get is taxable. This is one that often slips through the net because it isn’t cash in your bank account.
A positive with in-kind income is if you use any of these items for a legitimate business purpose you can offset the income you make by declaring it as a business expense. Again, this is one to run by your CPA as write-offs are a whole different ball game when it comes to online creators. You can read more about that in our blog here.
Making income should feel awesome, not scary.
We recognize keeping track of the different types of taxable income for content creators, might be more than you bargained for when you first picked up your device and started filming, but look where you are now! You’re making legitimate cash doing something truly cool. That’s something to lean into, not shy away from.
If all of the IRS rules and regulations are keeping you awake at night, it’s prudent to get a CPA who can guide you through it all*. That’s where we come in. Online creators, influencers, and general creative nomads are our JAM.
Get in touch with us by filling out our form and we’ll handle the rest.
*To be honest, it’s prudent to get a CPA even if you’re sleeping like a baby. Those are the people we worry about.