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If you do not receive the income tax form via the mail, online creators have to be able to report any income earned from their content that is monetized on their tax returns. Even though other online stores (like Etsy and Amazon) complicate tax filing because they charge fees for unnecessary services the tax filing process is much simpler and easier to find and more relaxing, leaving time to focus on the content.
1099-Ks Tax Season Update:
We'll start by defining the fundamentals. What is the 1099-K exactly? 1099-Ks are tax forms that are provided by the IRS that examine credit and debit card transactions that are processed by third party network payment processors. Processors that are third party (like PayPal, for example) can report on their processing of transactions in the course of their business. If you're a business owner who accepts debit or credit cards then you'll probably receive 1099-Ks through the mail, along with the IRS. Because the IRS will be receiving every single copy of the 1099-Ks it's crucial to remain transparent with tax return filing.
Gross payments
In case you aren't aware that your earnings are gross is the sum of your income before tax and deductions. The past was when many content creators did not be required to disclose their earnings as the minimum threshold to qualify to do so was set at $20,000. The maximum net income that can be used to make money from online content was reduced dramatically to just 600 dollars.
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 are below the limit of $600 however you are not a taxpayer, there is no need to submit an application for a 1099-K.
Eliminating Hobby Classification
The Hobby category is when the IRS discovers that your business doesn't actually exist as an entity, but it is an activity. Some content creators, especially those who are just getting started in the field, may consider it a great option. It's not a business, I'm not taxed is it not? Absolutely certainly not. Actually, it's harmful both for your business and your profits if IRS believes that your business is considered to constitute an entity exempt from tax.
State Sales Tax
A second thing to take note of while preparing for tax time is is the sales tax that is imposed by the state. This is crucial when you're an online creator as your goods are accessible all over the world.
Get an Tax Professional
We can provide tips and suggestions to our readers, but however, we aren't accountants. We advise all of our website authors to seek help with an accountant to get a professional opinion about how to save tax dollars, steer clear of tax mistakes and simplify the process of paying taxes.
Making it all the way to Tax Season All the way up
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