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Do influencers and YouTube stars need to pay taxes?

The short answer is yes. All income earned through any form of employment, including online sources, is taxable income.

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There is a lot of debate surrounding whether or not influencers and YouTube stars need to pay taxes.

On one hand, it could be argued that they are simply providing a service. They don’t need to pay taxes on the income they generate from this service. 

However, it could also be argued that these individuals are running businesses; therefore, they should pay taxes on their income.

This post will explore both sides of this argument and conclude what the law says regarding this issue.

Do influencers and YouTube stars have to pay taxes on the income they earn from their online platforms?

The short answer is yes. All income earned through any form of employment, including online sources, is taxable income.

For example, a blogger earning $1,000 monthly from blogging a product she doesn’t sell must pay taxes on that income. 

Whether or not an influencer or YouTuber needs to pay taxes from their online platforms’ earnings depends on several factors.

This includes their income tax bracket, the type of income they earn, and whether they are a “passive” or “active” income source.

All income influencers make is likely to be taxable

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Image: KnowTechie

One of the main issues many people have with tax compliance requirements for influencers and YouTube stars is that they don’t necessarily run businesses.

Influencers and YouTube stars generate most of their income from one source – their online platforms. 

While it is true that many generate revenue from selling products, many do not. Some earn income from other sources, such as side hustles, stock ownership, or other businesses. All of this income is likely to be taxable. 

Furthermore, the income generated by a business is likely to be reported as income by the business’s owners, whereas the income generated by an independent contractor is not.

As a result, it is important to understand how the IRS defines business income and to determine if your income is business income.

How does the IRS determine if an influencer needs to pay taxes on their income from online platforms?

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Image: KnowTechie

The IRS does not publish a list of specific taxes that influencers and YouTube stars must pay but instead gives some general guidance.

First, the IRS determines if your income from an online business is considered income from a “business” for tax purposes.

A business is any entity engaged in activities that generate income, whether a company, an organization or just one individual.

The IRS looks at your income from online platforms and determines if it is from a “business.”

If it is, the IRS then looks at whether or not you have invested any of that income in things that will generate more income, such as an office building, equipment, or even inventory. 

What are some of the tax deductions that influencers can take advantage of to reduce their taxable income?

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Influencers and YouTube stars can use several tax deductions to reduce their taxable income.

An influencer or YouTuber who itemizes their income can take the tax deduction of up to $1 million per year, which is applied only to the first $1 million of income from all sources. 

The income of an individual who is the owner or manager of a business is not subject to taxation unless that income is reported as income on the individual’s tax return. This is known as being “active” in your business.

As an example, let’s say that you are the manager of a travel business. You earn $500,000 in annual income from online travel platforms. 

As the owner, you are actively engaged in your business and can take the business’s tax deduction.

Have any thoughts on this? Let us know down below in the comments or carry the discussion over to our Twitter or Facebook.

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Chris has been blogging since the early days of the internet. He primarily focuses on topics related to tech, business, marketing, and pretty much anything else that revolves around tech. When he's not writing, you can find him noodling around on a guitar or cooking up a mean storm for friends and family.

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