Do streamers pay taxes? With the modern age come modern problems. As we slowly enter the second half of 2021, due to the pandemic a lot of online jobs/businesses began to thrive. One of them is streaming. To be exact, Twitch streaming.
If you’re making any money from Twitch, be it from donations, ads, sponsorships, or any other source of income you have from Twitch, you’re obliged to pay taxes.
If you’re a US citizen, 15.3% of your total Twitch earnings go to the IRS – 12.4% to Social Security and 2.9% to Medicare. And if you’re not a US citizen, you own IRS 30% of your revenue.
If you’re making more than $600 a month, that’s considered self-employment, and if you’re making less than $400, you don’t pay self-employment taxes, but you still have to pay income taxes.
You need to report all your income, which you do as follows:
- Log into your Twitch account
- Go to View/edit in the Royalty row
- Find forms button in the Year-end tax forms and choose 1099 form to fill in
So, the main question here is, do you need to pay taxes if you are a Twitch streamer? The answer is yes, and we are here to help you and make it easier for you in any way possible when it comes to filing taxes.
However, need to have in mind that everybody is going to have different tax brackets. This will depend on your age, marital status, where you are in life, and what country you are in.
Let’s start with this Twitch taxes guide!
Table of Contents
Do Twitch Streamers Pay Taxes?
Yes, absolutely, but that depends on various things. A lot of you take interest in Twitch, either as a viewer or as a streamer.
Nevertheless, it all comes to the same question; do you need to file/pay taxes when you are a Twitch streamer?
First of all, it depends on if and how much money you are earning from Twitch. If the answer is yes, then you are obligated to pay taxes according to your earnings in the US. This will include any revenue from donations, ads, sponsorships, or any other source of income you have from this streaming platform.
Basically, on every 29th of January Amazon sends you a 1099 form if you have made more than 600 dollars a month in the previous year. In other words, if you made more than 12.500 dollars in a single year you must pay taxes on it.
What is a 1099 form, must be your next question I presume. This is the form you use to figure out how much income you made during the year and what type of income it was.
How do you get your 1099 from Twitch? Well, if you made an NN amount of money they should automatically send you one. However, if this doesn’t happen you should follow the next steps:
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 then the answer is, sadly, yes, when you think about donations/tips first thing that pops to mind is a gift. So why would you have to pay taxes for gifts?
Well, this confusing thought is only partly true because you are not obligated to pay taxes from donations only if you are a nonprofit organization. So, primarily you guys as streamers are obviously not a nonprofit organization and that is why you will have to pay taxes on your donations.
In other words, whatever it is, it’s considered a transaction of money regardless of how charitable the person thinks they are because you are not a charity (unless you are signed up to be a charity, which is a whole different tax bracket).
So donations, tips, support, or any other way you call it, it’s a transfer of money which means it’s an income source that needs to be reported.
And just so you know, you need to report the actual number that you received. Thus, if somebody sent you five dollars, you won’t receive five dollars. This happens because of the payment processors like PayPal that will take away their fee, so most likely you will get around 4 dollars.
Those will be the numbers you would want to add to your excel sheet to report your Twitch donation taxes or you may call it your Twitch streamer taxes.
Therefore, if your question was, are Twitch donations taxable? The answer for you is yes, my man. There is no escaping when it comes to paying TAXES.
What qualifies as an expense for live streaming?
This particular subject is indeed a very tough one. Generally, it is what’s common for the industry and what is a necessity for that industry as well.
Since live streaming and online content creation are generally new, nobody can really say what qualifies for those defining factors because it is always changing as it’s going forward and evolving. So it’s up to you to say what is a necessity and what’s common in the industry.
For example, you can use something like the camera that produces the video quality that you need to be able to talk and stream to your audience. A camera can seem like a necessity, so it will probably qualify as an expense.
On the other hand, something like a video game that you only use a handful of times and may or may not use to stream, most likely won’t qualify as an expense.
Therefore, if you think you got expenses that qualify for your online content creation or live stream. I highly recommend making an excel sheet and for every month of the year add in all the things that were expenses to your stream.
There you can put what the product is, where you got it from, the time that you bought it, the total price including taxes, and make sure you do the grand total. That way you will have something to go back to, and you can add to the itemized expenses and deductions throughout the year.
Easy Way to Track and Pay Twitch Taxes
Nowadays, when entering the world of taxes the IRS will make it pretty easy for you in case you made any income on different media and platforms out there. Most platforms will send you some kind of documentation that you have to enter into the corresponding boxes.
But there are some exceptions to the rules out there, if you made money or transferred any money through your PayPal account, PayPal does not have to send you any documentation. They are only going to send it to you if you made something around 10k that year.
Most people out there won’t qualify for that, which means you are going to have to go through all of your PayPal transactions and add them up for the month and have a grand total and then add that year together and report it to the government.
Through our research, we have realized that one of the easiest ways to pay your taxes is to use a third-party app. This will enable all of you that are earning money from streaming to do your thing without any major worries when it comes to filing taxes.
The app that we are referring to is the Keeper Tax. This app will use the information you give it from your 1099 and will automatically go through all of your credit cards and bank accounts statements for deductibles.
Now if you have things like sponsorships, affiliate sales, promotions, or anything like that you should know that those are also reportable and need to go into the corresponding boxes. It’s because that is miscellaneous income coming in as well.
Therefore, make sure you don’t forget about sources of revenue coming in because those can easily be forgotten about.
If you are making any kind of money from streaming platforms one of the best tips I can give you, depending on where you, are most likely taxes are not being withheld.
This means that you have to report them, and depending on what bracket you are in that could be a hefty amount of money. For most of you, that should be somewhere between thirty and forty percent.
So, if you are making money on platforms like Twitch makes sure you set a certain amount of money aside 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.
We have reached the end of our learning journey and I really hope that you guys found this article helpful and understandable. If we made taxes a little bit easier to grasp, then we have done our job.
The main thing to remember is to always keep good track of your income and expenses, so you can sustain a profit without having to pay fees and penalties for not paying taxes on time. Good luck guys and remember to always pay your taxes.
Related: How to Make Money on Twitch