Do streamers pay taxes? With the modern age come modern challenges. As we gradually enter the second half of 2021, many online jobs and businesses have flourished due to the pandemic. One of these is streaming, specifically Twitch streaming.
Key Takeaway
If you earn money from Twitch, whether through donations, ads, sponsorships, or any other income source, you are required to pay taxes.
If you are a US citizen, 15.3% of your total Twitch earnings is allocated to the IRS – with 12.4% going to Social Security and 2.9% to Medicare. If you are not a US citizen, you owe the IRS 30% of your revenue.
If you earn more than $600 a month, that is classified as self-employment. Conversely, if you earn less than $400, you do not owe self-employment taxes; however, you are still required to pay income taxes.
You must report all your income, which you do in the following manner:
The main question here is: do you need to pay taxes if you are a Twitch streamer? The answer is yes. We are here to assist you and make the process of filing taxes as easy as possible.
However, it is important to keep in mind that everyone will have different tax brackets. This variation depends on factors such as your age, marital status, stage in life, and the country you reside in.
Let’s begin with this Twitch taxes guide!
Table of Contents
Do Twitch Streamers Pay Taxes?
Yes, absolutely, but that depends on various factors. Many of you are interested in Twitch, either as viewers or as streamers.
Nevertheless, it ultimately leads to the same question: do you need to file or pay taxes as a Twitch streamer?
First of all, it depends on whether and how much money you are earning from Twitch. If the answer is yes, then you are required to pay taxes based on your earnings in the US. This includes any revenue from donations, ads, sponsorships, or any other sources of income you receive from this streaming platform.
Essentially, on every 29th of January, Amazon sends you a 1099 form if you earned more than 600 dollars in any month during the previous year. In other words, if you made over 12,500 dollars in a single year, you are required to pay taxes on that amount.
What is a 1099 form? That must be your next question, I presume. This is the form you use to determine how much income you earned during the year and the type of income it was.
How do you obtain your 1099 from Twitch? If you earned an NN amount of money, they should automatically send you one. However, if this does not occur, you should follow the steps below:
Do You Have to Pay Taxes on Twitch Donations?
Do Twitch donations get taxed? Do Twitch streamers pay taxes on donations? If these are your questions, the answer is, unfortunately, yes. When you think about donations or tips, the first thing that comes to mind is a gift. So why would you have to pay taxes on gifts?
This confusing thought is only partially true because you are not required to pay taxes on donations only if you are a nonprofit organization. Therefore, as streamers, you are clearly not a nonprofit organization, which is why you will need to pay taxes on your donations.
In other words, regardless of how charitable a person believes they are, any exchange is considered a transaction of money, as you are not classified as a charity (unless you are registered as a charity, which falls under a different tax bracket).
Donations, tips, support, or any other term you use refer to a transfer of money, which means they are a source of income that must be reported.
Just so you know, you need to report the actual amount you received. Therefore, if someone sent you five dollars, you won’t receive the full five dollars. This occurs because payment processors like PayPal deduct their fees, so you will most likely receive around four dollars.
These are the numbers you will want to include in your Excel sheet to report your Twitch donation taxes, also referred to as your Twitch streamer taxes.
Therefore, if your question is whether Twitch donations are taxable, the answer is yes. There is no escaping the obligation to pay taxes.
What qualifies as an expense for live streaming?
This subject is indeed quite challenging. Generally, it encompasses what is common in the industry and what is necessary for that industry as well.
As live streaming and online content creation are relatively new, no one can definitively state what qualifies as the defining factors, as these elements are continually changing and evolving. Therefore, it is up to you to determine what is essential and what is common in the industry.
For instance, you can utilize a camera that delivers the video quality you require to communicate and stream to your audience. A camera may appear to be essential, so it will likely be considered an expense.
Conversely, a video game that you use only a few times and may or may not use for streaming is unlikely to qualify as an expense.
Therefore, if you believe you have expenses that qualify for your online content creation or live streaming, I highly recommend creating an Excel sheet. For each month of the year, list all the expenses related to your stream.
There, you can specify what the product is, where you purchased it, the date of the purchase, the total price including taxes, and ensure you calculate the grand total. This way, you will have a reference to return to, and you can add it to the itemized expenses and deductions throughout the year.
Simple Method for Tracking and Paying Twitch Taxes
Nowadays, when navigating the world of taxes, the IRS makes it relatively easy for you if you have earned income from various media and platforms. Most platforms will provide some form of documentation that you need to enter into the appropriate boxes.
However, there are some exceptions to these rules. If you earned money or transferred any funds through your PayPal account, PayPal is not required to send you any documentation. They will only provide it if you made approximately $10,000 that year.
Most people will not qualify for that, which means you will need to review all of your PayPal transactions, sum them up for the month, calculate a grand total, and then aggregate that for the year to report it to the government.
Through our research, we have discovered that one of the simplest ways to pay your taxes is by using a third-party app. This will allow all of you earning money from streaming to focus on your work without significant concerns about filing taxes.
The app we are referring to is Keeper Tax. This app utilizes the information you provide from your 1099 and automatically scans all your credit card and bank account statements for deductible expenses.
If you have items such as sponsorships, affiliate sales, promotions, or similar activities, you should be aware that these are also reportable and must be entered into the appropriate boxes. This is because they constitute miscellaneous income as well.
Therefore, ensure that you do not overlook sources of incoming revenue, as they can easily be forgotten.
If you are earning money from streaming platforms, one of the best tips I can offer is that, depending on your location, taxes are likely not being withheld.
This means you must report them, and depending on your tax bracket, that could amount to a significant sum of money. For most of you, this should fall between thirty and forty percent.
So, if you are earning money on platforms like Twitch, be sure to set aside a certain amount for the tax year.
Twitch Taxes Guide FAQ
What is the minimum income to file taxes in 2021?
Well, the answer to this question depends on a couple of things. The first being if you are single and under 65 years of age, and if so your minimum gross income needs to be 12.400 us dollars or above. If this is the case, you will need to file your taxes. The next thing, if you are single and over 65 the estimated minimal income will need to be above 13.850 us dollars for you to file taxes. If you are married and want to fill separately the minimum income is 5 us dollars. Why is that? This is due to the government trying to encourage couples to file taxes jointly. If you choose to file jointly, the minimum numbers for you to be expected to file taxes should be 22.200 us dollars.
Should I file taxes with no income?
The answer to this question is simple. No, you don’t have to file taxes with no income. Also, if your income during the tax year doesn’t exceed the minimum IRS requirements you are not obligated to file a tax return.
What can streamers claim on taxes?
The majority of things used for streaming can be deducted from taxes. As I mentioned above any equipment such as camera, mic, computer, desk or any other streaming equipment that is used only for streaming activities can be deducted. Income also may be deducted, but only if you have proof of putting that same money back into your business.
How much can you make without filing in taxes?
As I said above this depends on multiple things, first being your age, then your marital status. If you are under 65 years of age the minimum IRS requirements income mu be over 12.400 us dollars for you to file taxes. If you are over 65 your minimum income requirement increases by around 1.200 us dollars. And last but not least your marital status, if you choose to file taxes separately if your minimal income is 5$ (and this is just funny) you must file for taxes. But on the other hand, if you choose to file taxes jointly as you should then the minimum income should be above 22.200 us dollars for you to be obligated to file taxes.
Are Twitch donations tax-deductible?
Normally, no they are not tax-deductible. As I already mentioned in the text, donations are money transactions that make a part of your income. Therefore, they are considered as income and must be reported to the government for proper tax payments. The only way donations can be deductible if they are sent to a nonprofit organization such as charities.
Conclusion
We have reached the conclusion of our learning journey, and I sincerely hope that you found this article helpful and easy to understand. If we have made taxes a bit easier to comprehend, then we have accomplished our goal.
The most important thing to remember is to consistently track your income and expenses, allowing you to maintain a profit without incurring fees and penalties for late tax payments. Good luck, everyone, and remember to always pay your taxes.
Related: How to Make Money on Twitch
