4 Last-Minute Tax Filing Tips For YouTube Creators

As a relatively novel career proposition, being a YouTuber presents new challenges and opportunities come tax time. And because the lines between everyday life and business expenses tend to blur among social media stars, it’s especially critical to be vigilant about what constitutes a deductible expense and what doesn’t.

With filing deadlines just around the corner, we spoke with the experts at Semaphore — a tax and accounting firm that has been working with YouTube clients for roughly eight years, including bold-faced creators like Philip DeFranco and Adam Dahlberg (aka Sky Does Minecraft) — for four of the most important things to keep in mind this tax season.

1. How you should file?

If you had net earnings of more than $400 from YouTube-related work last year then you’re legally required to file a tax return, says Semaphore CEO Michael Bienstock. Typically, a YouTuber should file as a ‘sole proprietor’ (aka “someone who owns an unincorporated business by himself or herself,” according to the IRS). But if you’re earning over $100,000 in annual income from your online video operations, “it’s in your best interest to consider creating a formal company,” says Bienstock. That’s because sole proprietors are subject to a self-employment tax of roughly 15%, which isn’t the case if you file as a different legal entity, like an LLC or as an S-corporation.

2. What’s deductible?

Generally speaking, YouTubers should attempt a mindset shift come tax season. That’s according to Katie Smith, Semaphore’s Experience Officer.  Too many online video creators perceive video-making as a carefree hobby as opposed to a viable business. “If there’s a painting hanging over the couch where you film your videos everyday, even though it’s your living room that painting becomes part of a set,” Smith explains.

To this end, any and all video-making and production-related expenses are deductible, according to Bienstock, including cameras, computers, monitors, lighting, and props. And so are contractors — such as editors, writers, assistants, and legal services. And because YouTubers are frequently required to travel for business — for events, vlogging, shoots, conventions, meetups, and tours — Bienstock adds that these expenses, including flights, hotels, meals, entertainment, and transportation, are deductible as well.

3. What’s not?

Because the lines between business and pleasure can blur among creators whose lives essentially are their jobs, Smith says it’s crucial to identify which expenses are strictly personal. These include medical bills, gym memberships, manicures, and pedicures. “I think people think because they’re on camera, they need to look good, and so that’s a business write-off,” she says. “But the IRS views that as a personal expense.”

There is some leeway with clothing, however, especially among proprietors of fashion and beauty-oriented channels. “The way we tell people to look at it is if it’s something that you can wear to the grocery store, you can’t write it off,” Smith explains. “If it’s something for a specific event, like a red carpet event, you can write it off as kind of a wardrobe expense/costume category.”

4. Should you hire an accountant?

If you’re not at the point in your career where you can afford a monthly bookkeeper, Bienstock says to “keep a running record of all business-related income and expenses for each month.” Scan receipts and save them electronically — this prevents them from fading — and file the documents away for up to three years so that you’re covered in the case of an audit.

And while online filing services like TurboTax can be an easy way for W-2 employees to file, Smith says, this kind of software can potentially result in oversights for the self-employed. Working with a professional accountant — even though it might be more expensive in the short term — could ultimately yield greater savings.

Of course, this is a line towed by accounting firms the nation over. However, if Semaphore has become the defacto service for the likes of DeFranco and Sky, and has been in the game since the rise of AdSense, it might very well be worth looking into.