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Although you may not get an income tax form in the mail, online creators are still responsible for reporting income from monetized content on tax returns. Even though other websites (like Etsy and Amazon) can make tax reporting more difficult by imposing unnecessary fees, makes tax season more manageable easier to access, less difficult, and less stressful, giving the time for you to concentrate on your content.
Tax Season Insight: 1099-Ks
We'll start by defining the basics. What exactly are 1099-Ks? 1099-Ks is a form issued by the IRS which track credit and debit card transactions that are processed by third-party network transactions. Third-party processors (like PayPal, for example) are required to report transactions they process for their businesses. So if you're a content creator that accepts payments via credit or debit and you'll probably receive an e-mail with a 1099-K and so will the IRS. Since the IRS will be receiving every one of the 1099-K, it's important to keep your information up-to-date when filing taxes.
Gross Payments
If you don't be aware, gross payments comprise the total amount that you receive before taxes and deductions. Until recently, many content creators did not have to declare their earnings, as the limit for this qualifier was the amount of $20,000. Beginning in 2022 the maximum gross amount to monetize content online has been reduced 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 fall under the $600 mark and you are not a tax payer, then you do not need to file a 1099-K.
Eliminating Hobby Classification
A hobby classification happens where the IRS determines that your business is not really a business--but an activity. A few content creators, specifically people who are new to this field of work may think that this is a great decision. If it's just a hobby you can't tax me surely? Absolutely certainly not. In fact, it's detrimental to you and your income when you are taxed if the IRS classifies your business as one of these.
State Sales Tax
One final thing to remember in preparing for tax time is the state sales tax. This is crucial when you are an online creator since your items are available worldwide.
Contact a tax Professional
While we can offer some advice and helpful tips We aren't accountants. encourages all of our online creators to seek out the assistance of a tax expert to gain professional advice on how to save more on taxes, stay clear of tax mistakes, and help assist in making tax payments easier.