How do Social Media Influencers Pay Taxes? Full Guide

Social media influencers pay taxes on income of at least $600 or more from creating sponsored content, affiliate marketing, brand partnerships, and monetizing their contentand online brand.

Their income may be in the form of sponsor deals, monetized YouTube videos, affiliate marketing, and income generated from collaborating or working in partnership with various brands.

With the rapidly growing influencer market, it’s not surprising that more people are eager to know how the Internal Revenue Service monitors and implements taxation rules on social media influencers’ income.

Key Takeaways

• Influencer taxes, or content creator taxes, are a common term for the taxes paid by influencers or online content creators who make at least $600.
• Influencers and content creators must pay various taxes, including self-employment taxes, federal income taxes, and state income taxes.
• An influencer may be taxed as an independent contractor, a sole proprietor, or a Limited Liability Company (LLC).
• Some of the most common influencer tax write-offs for 2024 include home office deductions, travel expenses, self-employed healthcare premiums, phone and internet expenses, and app fees.

Do Influencers Have to Pay Taxes?

Influencers, also called social media influencers or online content creators, have to pay taxes and file their income tax return if they earn at least $600 from their social media activities.

Paying taxes and filing returns apply regardless of whether an influencer creates online content as their full-time job or only pursues it as a hobby.

But how does an influencer make money?

By definition, an influencer is an individual with a massive following and engagement across various social media platforms. Not only that, they also have a strong persuasive power that can influence and affect a target market’s purchasing decisions.

As such, brands hire influencers to help promote their products and services.

Conversely, an influencer may also generate income by creating content that’s focused on a specific niche, such as gaming, beauty, fashion, technology, fitness, parenting tips, and even financial literacy.

Furthermore, influencers may earn as well by allowing ads to run on their videos or content.

While influencers, in general, are categorized as self-employed, they can be considered as either independent contractors, sole proprietors, or limited liability corporations (LLC). Let’s take a closer look at each of these business formations that help determine influencer taxes:

Influencers as Independent Contractors

An influencer is an independent contractor by default because their brand deals and services are considered freelancing or an example of a job for an independent contractor.

Independent contractor influencers should expect to receive a 1099-NEC form from their client if they earned at least $600 through their partnership. Otherwise, if they earned less than $600, then it is the influencer’s responsibility to secure the said tax form to file their taxes.

Influencers as Sole Proprietors

It is not uncommon for influencers to also categorize themselves as sole proprietors. This means that they create content and operate their influencer business on their own.

They must use Form 1040 and Schedule C to report their income and file their taxes.

Influencers as LLCs

When influencers operate as LLCs or separate business entities, they usually do so due to the added legal protection and the separation of their personal assets from their business income.

LLCs also serve as pass-through entities, which means that influencers can report or declare their earnings on their individual tax returns and avoid paying double influencer taxes.

What Taxes Might Influencers Have to Pay?

Some of the taxes that influencers might have to pay include FICA taxes, self-employment taxes, federal income taxes, and state taxes, if applicable.

In truth, self-employment taxes are comprised of FICA, Social Security, and Medicare taxes. Unlike W-2 employees who split the FICA tax rates with their employers, influencers must pay the combined 15.3% tax rate for Medicare and Social Security taxation.

On the other hand, influencers who are taxed as sole proprietors or LLCs should subtract their business expenses from their business earnings to determine their profits and losses.

If influencers spend more than they earn, then it is considered a net loss, which influencers can deduct from their taxable income. In contrast, if their earnings outweigh their expenses, the difference is called a net profit and is then added to the influencer’s earnings.

Apart from the aforementioned influencer taxes, influencers are required to make quarterly estimated tax payments since they earn self-employment income. If they categorize themselves as sole proprietors, then estimated tax payments are also a must.

It is essential to point out that influencers may qualify for a tax refund if the IRS finds that they paid an excessive amount on their estimated taxes and income taxes.

You might also be wondering whether influencers are taxed per state. State taxes vary per state and only 41 states in the US levy income taxes. Meanwhile, some states have commenced enacting regulations on social media taxation.

For instance, Maryland began levying taxes on internet-based corporations and social media companies, generating an annual gross revenue of $100,000,000 by selling advertising spots or time on their platforms.

If a regulation social media tax is legislated on a federal level, then it may affect the income and tax liabilities of influencers who use multiple social platforms to advertise and post their content.

Do Influencers Have to Pay Taxes on Gifts?

Influencers have to pay taxes on gifts received from brands on a case-by-case basis. These gifts may be in the form of free products or items, sponsored trips, or clothing.

The IRS identifies basically any gift as a type of taxable gift and uses the corresponding fair market value of the item upon receipt as the basis for the applicable tax rate.

If the gifts or items are given in exchange for promoting a brand or a product, then the items are not considered gifts but rather payments for the influencer’s services. That said, content creators must report the payment received on their returns.

5+ Influencer Tax Write-Offs and Deductions

Fortunately, influencers also qualify for certain tax write-offs and deductions. Depending on how they operate their business, they may claim the following deductions or write-offs and effectively regulate their tax dues:

#1. Home Office Deduction

Home office deduction applies to influencers who have a dedicated space or office in their residence where they fulfill their obligations to their partner brands, create and edit their content, and engage with their followers.

To deduct home office costs from influencer taxes, content creators can subtract $5 per square foot of their residence (or up to 300 square feet) used for their home office.

Alternatively, they can also add all of their self-employed and business-related expenses and subtract the total from the taxes they owe.

#2. Phone and Internet Use

Internet and cellular services are crucial for influencers to continue posting and promoting their content online. Ideally, content creators must have a cell phone that they use exclusively to handle all business-related communication and transactions.

However, if they use a single phone or cell service for both personal and business use, then they are only allowed to deduct the percentage of phone and internet use dedicated to their business or services as an influencer.

#3. Travel Expenses

Travel expenses as an influencer tax deduction work by allowing content creators to deduct airfare, transportation expenses, as well as meals and accommodation included in their trip.

There are specific conditions that influencers must follow to qualify for a travel expense deduction.

• They can only deduct business- or work-related travel costs.

• The destination of the business trip must not be within the influencer’s tax home or city where they mainly operate their services.

• They must have an itinerary and a set of clear objectives prepared for their business trip.

#4. App Fees

A fourth type of tax deduction that influencers can use is called app fees, which can be claimed when influencers use specific apps to fulfill their services or operate their business.

As such, they can claim subscription payments or service charges for using social media management and marketing platforms, video or photo editing apps, tax accounting software, and even cost-effective tools such as Paystub.org’s 1099 form generator.

#5. Expenses on Beauty Products & Apparel

Most influencers, particularly those whose niche focuses on beauty, make-up, and fashion, have to invest in high-quality clothing and products to entice more followers to engage in their content and buy the products they are promoting.

Some examples of clothing and beauty products that may be tax deductible include hair care products, tools, services and fitness apparel.

#6. Healthcare Premiums for Self-Employed

Influencers must not be enrolled in any employer-sponsored health insurance plan to qualify for a self-employed healthcare premium deduction. In the same manner, married content creators must not be eligible for enrollment in their spouse’s health insurance.

If they are enrolled in a health savings account (HSA), then they may also claim their HSA contributions to reduce their taxes.

When and How to File Taxes as an Influencer: Step-by-Step Guide

The regulations for filing influencer taxes follow the same rules for filing federal taxes and paying self-employment taxes.

Content creators can regulate their tax filing process by using the following steps as their guide:

Step #1. Take Note of All Essential Tax Deadlines

Influencers who earned at least $400 or $600 within the year must expect to receive a 1099-NEC form from their client on or before January 31st.

The tax filing deadline always falls on the same date each year, which is on April 15. However, content creators based in Maine or Massachusetts have until April 17 to file their returns due to certain observances.

For estimated tax payments, influencers should mark the following quarterly deadlines on their calendars:

• April 15, 2024: 1st Quarter of 2024 (January 1 to Mar 31)

• June 17, 2024: 2nd Quarter of 2024 (April 1 to May 31)

• September 16, 2024: 3rd Quarter of 2024 (June 1 to August 31)

• January 15, 2025: 4th Quarter of 2024 (September 1 to December 31)

On the other hand, if an influencer misses the April 15 filing deadline, they can file for a tax extension and get additional time to prepare all the important documents to report their annual taxable income and file their returns.

The tax extension deadline for 2024 is on October 15, 2024.

Step #2. Learn About Relevant IRS Forms

Aside from the 1099-NEC form, content creators may also encounter the following IRS forms when filing their influencer taxes:

• Form 1099-K. Influencers may receive a 1099-K form if they were paid by their clients via payment apps.

• Form 8829. Form 8829, Expenses for Business Use of Your Home, comes in handy when influencers want to claim a home office deduction on their influencer taxes.

• Schedule C (Form 1040). Schedule C of Form 1040 is used to report all business expenses and tax write-offs that are relevant to an influencer’s business operations.

Step #3. Itemize All Deductions

We’ve already discussed some helpful tax deductions that apply to an influencer’s nature of work. All they have to do is assess which types of deductions would work best for them and allow them to manage their business expenses.

As a bonus, here are 17 more tax deductions for independent contractors that influencers can look into to further maximize their possible tax breaks.

Step #4. Use Practical Online Tools

Influencers who want to save money can take advantage of cost-effective and practical tools such as Paystub.org’s 1099 form generator.

Our generator lets influencers report and review their annual income with ease, thanks to our ready-made template and built-in calculator. By simply inputting their personal, income, and tax details on the blank fields, they save time and effort in assessing their influencer tax obligations.

They can also check out our pay stub generator, a tool designed to record employee and independent contractor income and calculate their gross and net earnings, taxes, and applicable deductions.

How to Keep Records as an Influencer or Content Creator

Keeping records as an influencer or content creator is an essential accounting tip that enables content creators to be more mindful of their influencer taxes and financial management practices.

It is crucial for influencers to keep a copy of all their transactions, whether they are business-related or personal expenditures. The goal is to have a complete and updated record or proof of where their income goes.

Aside from receipts and transactional documents, contracts between brands and fellow content creators detail the scope of their professional relationship with their sponsors and brand partners.

Such information could also prove useful when calculating their expected income or payment later on.

Last but not least, content creators should keep copies of their tax returns for two to three years in case they need them as a reference for their future tax filing process.

Final Thoughts

To sum it all up, influencers do pay taxes. Remember, the Internal Revenue Service does not discriminate against any occupationor income source when it comes to levying income taxes.

As such, content creators are not exempt from contributing to the government's funds for public services and programs.

At first glance, handling influencer taxes can be quite difficult and confusing, but by using our informative article as a guide, influencers can handle their taxes like pros in no time!

Influencer Taxes FAQ

#1. Are influencers independent contractors?

Yes, influencers are considered independent contractors or self-employed individuals. All services offered by an influencer, including brand deals between companies and influencers, are also categorized as freelance work.

#2. How to file taxes as a content creator?

As a content creator, you can file your taxes by using the 1099-NEC form and Schedule C of your individual Form 1040 to review, verify, and report your annual taxable income to the IRS.

#3. How do influencers or online content creators get paid?

Influencers or online content creators usually get paid mainly through monetizing their videos or content on YouTube and social media platforms. They can also earn through subscriptions or receiving donations and tips from their followers.