Social media influencers may seem to live charmed lives. But then comes tax time.
Nothing screams "real job" like having to pay taxes, which is how Instagrammers, TikTokers, YouTubers and other social media influencers know they’re the real deal.
Social media content creators, like everyone else with a more typical gig, must file their tax returns by April 15 with the IRS. Even if their lives look charmed on social media, you can almost bet their taxes will be more complicated.
“Being self-employed introduces complexity compared to reporting W-2 income as an employee,” said Richard Pianoforte, managing director of tax at Fiduciary Trust International who provides tax guidance to high-net-worth clients. “Numerous deductions are available, and determining the value of products received is not always straightforward.”
What taxes do social media influencers pay?
Influencers work as independent contractors for the companies they promote. Independent contractors are considered self-employed.
“In addition to standard federal and state income taxes, self-employed individuals are also obligated to pay self-employment taxes,” Pianoforte said. “The net income from self-employment is subject to a 15.3% tax rate, comprising 12.4% for Social Security and 2.9% for Medicare.”
You also should’ve been making quarterly estimated tax payments on your income since American taxes are pay as you go, meaning you need to pay most of your tax during the year, as you receive income, rather than in one lump sum at the end of the year.
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What’s considered income for content creators?
“Contrary to the notion of "freebies,” perks often entail tax implications,” Pianoforte warned.
For example:
◾ Sponsored posts: Compensation received from brands for creating content, whether in the form of videos, posts, or social media promotion, must be included as income.
◾ Brand partnerships: If a brand sponsors your podcast or video channel, the payment received must be reported as income.
◾ Promotional items: Items received from a brand for review should be reported as income at their fair market value.
◾ Ads: Income generated from ads needs to be accounted for as well.
What’s tax deductible?
Some examples of deductible items are:
Half of the self-employment tax from the adjusted gross income because that would have been the half your employer would have paid had you worked for someone else.
Certain purchases related to content creation, depending on the content. For instance, beauty vloggers can deduct the cost of makeup and hair products used in videos, or food bloggers can deduct meal expenses, Pianoforte said.
Home office deductions. Since many influencers work from home, their residence may be partly deductible in line with the rules for home office deductions.
What tax forms should content creators receive?
You should receive a Form 1099-NEC from each partner paying you $600 or more. However, all income, regardless of the amount and whether you receive a 1099-NEC, must be reported on tax returns, including the value of products received, experts warned.
If you earn income from YouTube, Instagram, or other platforms like AdSense, you will also receive a Form 1099-NEC for this income above $600, online tax filing software platform TaxSlayer notes on its website.
Note: State tax obligations may be complex as an influencer, too, if you work for companies outside of your home state. Every state in which you earn income will require you to file a tax return and pay taxes on the income earned there. You’ll also have to report that income in your home state return, but your home state usually allows you to take a credit for taxes paid to another state on the same income.
How many social media creators are there?
Around 200 million people consider themselves creators, but only a little more than a third would say that it's their full-time career, according to the 2022 Creator Report by Linktree, which develops tools for people to use on social media platforms.
Twelve percent of full-time creators earned more than $50,000 annually, but 46% earned less than $1,000, it said. Among part-time creators, 3% earned more than $50,000 and 68% earned less than $1,000.
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Medora Lee is a money, markets, and personal finance reporter at USA TODAY. You can reach her at [email protected] and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday.
