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If you do not receive tax returns via mail, the creators of online content must still be able to report the income from content that has been monetized for taxes. While other e-commerce sites (like Etsy and Amazon) could make tax filing more difficult by imposing excessive fees, they make tax filing simple, easy to access and less stressful--leaving the time for you to concentrate on your content.
The Tax Season Tax Season Insights: 1099-Ks
We'll start by defining the basics. What is the meaning of 1099-Ks? 1099-Ks are tax forms provided by the IRS which monitor debit and credit card transactions that are processed by third-party networks that process payments. Processors that are third-party (like PayPal, for example) are required to report transactions they process for their company. If you're a content creator who accepts payment through credit or debit cards you'll likely receive an e-mail with a 1099-K along with the IRS. Since the IRS is likely to receive every one of your 1099s, it's crucial to remain transparent while filing tax returns.
Gross payments
For those that don't understand that gross payments refer to the sums of money that you earn before tax and deductions. Until recently, many content creators were not required to declare their income--since the minimum threshold to qualify for this exemption was set at $20,000. The threshold for 2022 is now set at $20,000. the total amount paid to monetize content online has been reduced significantly to $600.
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 your income is under the threshold of $600 it is possible that you do not need to fill out an 1099-K form.
Avoiding Hobby Classification
The hobby taxation occurs in the event that the IRS discovers that your business does not actually constitute a commercial venture, but a hobby. Certain content creators, particularly novices to this field of work might believe this is a wise choice. If it's a simple hobby I'm not taxed, surely? Absolutely certainly not. Actually, it's harmful for both you and the earnings you earn when assessed tax if the IRS determines that your business as an entity it is classified as.
State Sales Tax
Another aspect to be mindful of as you prepare for tax time is taxes on sales in the state. This is crucial when you are an online creator as their products are distributed worldwide.
Get in touch with a Tax Professional
We can provide advice and useful tips, but we're not accountants. Encourages all of our web creators to seek an assistance from a tax professional for an expert opinion on ways you can save money on taxes, avoid any tax mistakes, and help assist in tax-paying easier.
Making it through the Tax Season All the way to
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