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Even if you don't receive any tax-related documents in the mail, creators of online content must still report income from content made monetizable in their tax return. Even though other online retailers (like Etsy and Amazon) can make tax reporting more difficult due to high fees, they can simplify tax time by making it easier manage easier to access easier, more manageable, and less stressful--leaving the time for you to concentrate on your content creation.
The Tax Season in Focus 1099-Ks
Let's begin with the basic. What is a 1099-K exactly? 1099-Ks are forms through the IRS that track credit and debit card transactions via third-party networks. Processors that are third-party (like PayPal, for example) can report on transactions that they handle to their business. So if you're a content creator who accepts payment via credit or debit cards, you'll likely receive an 1099-K by mail and so will the IRS. Since the IRS will have access to all of your 1099-Ks, it's crucial to make sure your details are up-to-date in order to file tax returns.
Gross payments
For those who don't be conscious, your gross income is the entire amount that you earn prior to deductions and taxes. In the past, creators of content didn't have to worry about reporting their income since the amount required to be eligible for this tax was set at a figure of $20,000. Beginning in 2022, the total amount of compensation for monetization of content online has been cut dramatically to just $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 below the $600 threshold and aren't a tax payer, then you don't have to file a 1099-K.
Stay clear of Hobby Classification
A hobby taxation occurs when the IRS decides that your company is not really a business--but it is a pastime. Some content creators, especially novices to this field of their work, could think it's a good option. If it's a hobby, it's not tax-free surely? No, absolutely not. In fact, it's detrimental both for your personal finances and your profits if you're taxed if the IRS classifies your company as one of those.
State Sales Tax
The last thing you need to be mindful of while preparing for tax season is the sales tax in your state. This is particularly important for creators who are online as their items are distributed across the globe.
Hire a tax professional Professional
Although we have some guidelines and advice for you Our accountants aren't experts. The website encourages all creators to seek help from experts in tax to obtain the advice of an expert on how to save in taxes, steer clear of tax mistakes, and in making the tax process easier.
How to get through tax season
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