Tax Tips for UGC Creators | How to File Taxes as a Content Creator?
Sep 08, 2024
*This guide does not constitute financial or legal advice. For specific questions, we recommend seeking the advice of a local tax professional specializing in content creator taxes.
Ladies, it's time to talk taxes. As a creative director and fellow UGC creator, I understand the lack of conversation and education around understanding our finances and taxes, especially as a woman. When do I file my taxes? What is a write-off? Do I need to keep receipts? Although taxes have been painted to be this scary, dreaded time for self-employed people the reality is, when you understand the WHYs and HOWs it is A LOT less intimidating.
P.S. Want to know a little secret? All it takes is proper planning and using the right resources to ensure doing your taxes is a breeze. Make your money work FOR YOU!
The number of taxpayers in the content creation field is SKYROCKETING. In fact, in December 2022 alone, there was a 207% increase in taxpayers declaring their occupation as creators, influencers, streamers, or similar roles!
This comprehensive guide will navigate you through the complexities of creator taxes and simplify the steps. It covers all the top questions like the types of income you need to pay taxes on, the timing of those taxes, how to report them, and how you can leverage your expenses.
UGC Creator Top Questions about Taxes:
A Brand just asked for my W-9. What in the world is a W-9?
A best practice is to send a W-9 form with EVERY invoice you send to a brand for your creator creation services so you don’t need to go back and chase down any individuals or companies later for the correct tax documents! A W-9 form helps you provide information to the brand that you’re doing work for (like your name, address, and tax ID number) and the business later uses the 1099 form to report your earnings as a contractor.
Sending a W-9 form with each invoice helps expedite both your payment and tax processes. Just download the PDF form and fill it out ( I use Canva, Photoshop, or SignNow to edit the document).
Do UGC creators have to pay taxes? YES...
Yes, all content creators must pay taxes on their income, whether it’s a hobby, a side hustle, or a full-time job.
When you’re hired as a contract worker/ freelancer for a brand, as many social media creators are, you’re considered self-employed. If you make at least $600 with a particular brand, the company must send you a tax form(1099-NEC), if you work for multiple brands, you’ll receive a 1099 from each.
Make sure you are putting 20% of your earnings into a high-yield savings account to pay your taxes come tax time. You can set one of these up online from your preferred bank for free most of the time.
Keep in Mind: you must report all income you make as a content creator, even if it’s less than $600. So be sure to report all your income, even if you don’t receive a 1099 form.
Self-employment Tax: In addition to federal and state income taxes, you'll need to pay self-employment tax, which covers Social Security and Medicare contributions.
Which tax forms do UGC creators RECEIVE from brands? 1099-NEC...
Whether you’re a social media influencer, UGC creator, freelancer, etc you're responsible for reporting the income you receive from your online activities. You're pretty much your own boss, meaning the companies you partner with won't send you a W-2 form (a common form you receive if you work for corporate).
Instead, you'll receive a 1099-NEC. If you make at least $600 with a particular brand, the company must send you a tax form called 1099-NEC, which you’ll report on your individual 1040 tax return using Schedule C (we will go in-depth on this later).
Receiving a 1099 NEC is just a fancy way of saying you will get a document that will list the amount of income you received from the brand, keep this and give it to your tax professional come tax time to report the income! Put it in a Google folder, or print it and keep it in a safe location!
When do content creators pay taxes? Quarterly...
Just like normal businesses who pay into Social Security and Medicare on behalf of the employees in their company quarterly, you as a business owner/freelancer must make tax payments to the IRS on a regular schedule, rather than waiting for the April 15 income tax deadline. This is called self-employment tax (different than income tax).
To make these payments, you need to estimate the taxes you'll owe for the year and then divide by four, because the payments are due in equal amounts, on a quarterly basis. The estimated tax deadlines typically are April 15, June 15, September 15, and January 15. Failing to make payments on time can result in a tax penalty. Normally, you don't have to make quarterly tax payments if your tax obligation in the prior year was less than $1,000.
AGAIN! Make sure you are putting 20% of your earnings into a high-yield savings account to pay your taxes come tax time.
The deadline for filing your tax return is typically April 15th of each year. If you need more time, you can request an extension using Form 4868.
Do content creators pay taxes on gifts? YES + NO....
Many companies provide social media creators with free clothes, makeup, furniture, and more to gain exposure for their products. Think, a gifted collab, pr boxes, etc! Generally, if the content creator or influencer is expected to perform a service in exchange for the gift, then it is considered payment for a service, and you should declare it on your taxes (if the value exceeds $100). There are exceptions and every situation should be evaluated on a case-by-case basis.
Note: If you verbally or in writing agree to post on your socials in exchange for free products it's considered taxable income! If you do not agree to post and are not exchanging a post for the products then it is a true gift and usually not taxable. đ
What are the ways to file taxes as a content creator?
While you can always pay a tax professional for your taxes, that isn’t the only option. For a cheaper option, you can also use a tax software like Turbo Tax or HR Block to report your taxes yourself!
I usually use HR Block and I opt in for $200 extra for a tax professional to look over all of my taxes when I am finished to make sure I get the best return and don't miss anything!
You could consider using a professional service like Cookie Finance for more premium service!
What tax forms do UGC Creators need to FILE?
Part-time and full-time creators typically file taxes using the following forms:
- Form 1040 (Individual Income Tax Return) – Form 1040 is the standard individual income tax return, the creator reports income, including wages from a full-time job, income from creating content, and any other income made through freelance or contract work. Creators may also report deductions, credits, and taxes withheld on this form.
- Schedule C (Profit or Loss from Business) Schedule C is an additional form that is used by self-employed individuals, sole proprietors, and single-member LLCs to report income and expenses from their business activities. This form is used to calculate your net profit or loss from your content creation activities. On Schedule C, taxpayers report their business income, deduct allowable business expenses, calculate their net profit or loss from the business, and report that amount on Form 1040.
What kind of income are you receiving as a Creator?
There are several types of income that you can make as a UGC creator because there are so many ways to make money online!!!
You’ll want to account for all of these when reporting your income:
- Revenue from the sale of digital products, services, courses, consulting, and/or subscriptions
- Income from contractor work reported on 1099s, such as brand deal partnerships or affiliate partnerships
- Direct income from tips and donations
- Ad revenue from monetized content, such as YouTube ad revenue
- Platform creator funds, such as the TikTok Creator Fund
- Income from UGC collabs
- Non-cash payment in the form of gifts or goods (aka gifted collabs)
What is tax deductible as a UGC creator?
Another perk of being a UGC creator? Tax breaks!! Also called tax deductions.
A deduction reduces the amount of a taxpayer's income that's subject to tax, generally reducing the amount of tax the individual may have to pay. The IRS lets you deduct “ordinary and necessary” expenses for running your content creation business.
Here are some common tax-deductible expenses for content creators:
- Equipment and software costs - this could be apps like Canva + CapCut, and tools like a stabilizer, tripod, microphones, etc.
- Marketing and promotional costs - any ads you run or ways to promote your content creation business.
- Home office deduction (includes office furniture and supplies) - your desk, pens + paper, office tools, if you work from home
- Professional development and education expenses - think courses (like our UGC Masterclass), downloads, anything to grow/invest in learning.
- Domain and hosting fees - for your UGC portfolio or website, etc.
- Legal + Tax Services - like a tax professional from HR block, insurance, or a UGC contract lawyer or contract.
How should I track my expenses + receipts from my UGC Business?
It's really up to you but organization and consistency are KEY, that way come tax time you don't have to comb through 12 months of documents + transactions to do your income and expense reports!
Maintaining detailed and accurate records of all your income and expenses is crucial. Here are some tips to help you stay organized:
- Track Income: Keep a record of all payments received from your content creation activities, including platform earnings, brand collaborations, and sponsorships.
- Record Expenses: Document any business-related expenses, such as equipment, software, internet costs, and travel. These can be deducted from your taxable income.
- Use Accounting Software: Consider using accounting software to automate record-keeping and generate financial reports.
I use QuickBooks to automatically track my expenses, store my receipts, and more! But there are a ton of subscription platforms out there that are helpful for creators like Keeper or HoneyBooks.
You can also track them for FREE on your own with the help of an Excel template or Notion dashboard! Check out our UGC Notion Dashboard to get a head start on tracking your UGC business and setting up your tax success!
Whew... That was A LOT, take a deep breath. đŽđ¨ Managing taxes as a UGC creator may seem daunting, but by staying organized, understanding your obligations, and planning ahead, you can streamline the process and focus on what you do best—creating amazing content. For personalized advice and further assistance, consider consulting with a tax professional who specializes in working with content creators.
xoxo
Maddy Creative Director @ VITAMINC
