Taxes aren’t fun, but they’re necessary. Whether you slog through them yourself, or hire an accountant, it’s important to know what you, as an influencer, need to report.
1. Where’s My MagicLinks 1099?
At the end of the calendar year, 1099 forms are typically only issued by employers when your annual income with that employer exceeds $600. There is an exception for PayPal-issued payments (i.e. your MagicLinks payments): Only when you earn $20,000 or more and have received 200 or more PayPal payments in one calendar year from one employer or network will you receive a 1099 form.
Even if you do not receive a 1099 form from an employer or company, you must still report the income.
2. Track EVERYTHING, All Year
Keep a separate filing system for expenses related to your channel: Receipts, contracts, pay stubs, etc. Filing things as you go all year will make your taxes a LOT less of a headache – we speak from experience.
3. Figure Out Your Deductions
Deductions = Expenses that reduce your taxable income, because they were for your business, not personal use. Deductions can include:
- Contractors – Photographers, videographers, makeup artists, web designers
- Office space – Have you rented a space just for your work on your channels, or have a home office dedicated exclusively to your channels? Office rent can be calculated using this equation:
Office rent= (Office Sq Ft / House Sq Ft) x Total House Rent/Mortgage
- Office supplies – Yes, buying makeup & clothes for videos can count. So can a new vlogging camera, editing software, and even your internet fees.
- Advertising – Did you pay for an Instagram ad? Facebook ad? Count those in.
- Giveaways – Any product given away that you paid for (NOT GIFTED TO YOU ITEMS) can be deducted.
- Education – If you went to Vidcon or ClamourCon or other industry events and paid for it out of pocket, you can deduct those.
4. Figure Out Your Income Sources
- Ad revenue
- Affiliate link revenue (ahem, MagicLinks)
- Sponsorships, even if you do not receive a 1099 form fro mthem
- Gifted products or travel – You are required by law to report the fair market value of any gifted items or free travel you received. A gifted product is considered an exchange of goods & services, if you do end up using it in a video/blog post.
5. You Might Need to Pay Self Employment Taxes
Did you take the big leap and quit your day job? Congrats! You still have to pay taxes on your income as an influencer! If your channels are still a “hobby”, you will still need to report your income. The IRS has a “Hobby Or Business?” page on their website you should check out, if you’re not sure.
6. Consider Quarterly Taxes
If your brand is taking off, consider paying taxes in quarterly installments, so you’re not faced with a GIANT bill come April 15th every year.
*cover image adapted from waspbarcode.com