April is coming up fast, which means taxes are top of mind for many content creators. But what they really should be doing is thinking about taxes all year long.
Now, we said thinking. We didn’t say stressing. Don’t get us wrong, though: taxes are stressful, especially for content creators. There are a couple reasons for that.
First, the majority of people who post videos on YouTube, TikTok, Reels, Facebook, or Snapchat don’t expect to suddenly start making hundreds of thousands of dollars from them–but that does happen, and thanks to the growth of social media and the maturation of the creator economy, it’s happening more frequently.
Second, all that money is taxable at self-employment rates, but platforms like YouTube and TikTok aren’t taking taxes out for creators. That means creators themselves have to correctly calculate how much their taxes will be and save that amount from each of their monthly content paychecks. Oh, and self-employment tax? It’s pricey: an extra 15.3% of what creators are making, on top of their usual federal and state taxes.
And those are just the basic struggles. Things get extra complicated when it comes to paying editors, hiring talent managers, paying production costs, and maybe even taking on investment.
To get a foothold on all this, creators should be planning ahead throughout the year–but even if they haven’t, there are some things they should know before filing their 2024 taxes.
Pro creators need accountants who understand our industry
Nate Coughran, a CPA with 12 years of experience and founder of tax and accounting creator services company Cookie Finance, is here to give us the lowdown.
“We are an accounting firm that was built specifically for content creators and influencers,” Coughran tells Tubefilter. “We provide the full suite of accounting and tax services, monthly bookkeeping, quarterly taxes, end-of-year taxes, and really being like a fractional CFO to our content creators.
“The whole point of the company was to provide that financial peace of mind to creators,” he adds. “This is scary stuff, and I know it can cause so much stress and anxiety. We’re here to provide that financial peace of mind to them.”
Coughran started Cookie Finance in 2023 after seeing the trouble his two sisters-in-law–both content creators–were going through while trying to get local accountants to do their creator taxes. He realized they needed specific help from someone who not only understands taxes, but the creator industry.
Now, Cookie has 16 CPAs on staff, works with hundreds of creator clients, and is expanding into Canada to help creators there, too.
Coughran’s #1 piece of tax advice for creators?
Start deducting more.
Traveling somewhere for a video? Deduct your plane tickets, rental car, hotel room, and other costs. Are you a culinary creator? Deduct all the food you buy for recipes and/or all the meals you film while eating out. Fashion vlogger? Deduct your clothes. Beauty? That’s right–your cosmetics are deductible.
Creators can also deduct their home internet costs and their cell phone bills, Coughran says, and can deduct a portion of their rent or mortgage as a home office. Basically anything creators touch in the process of making content can be deducted (but make sure you’re keeping those receipts as proof).
“There’s a ton of little things that really add up quickly to thousands of dollars of deductions,” he says. “Things you already spending money on that can actually be deducted.”
Now, that being said, there are some things creators shouldn’t deduct, like entire cars.
“Probably the biggest question we get is, ‘Can I write off my car?’ And the answer is, you can write off a portion of your vehicle, but I’d say a big mistake is to try to write off the entire car,” Coughran says. “When you do that, it’s a big, big, big, big red flag to the IRS. If you write off a portion of your car, if you write off the mileage, that’s totally fine, and it’s not going to raise any suspicion with the IRS. But we’ve had creators try to buy a $150,000 car and write it off as a marketing expense. I’m like, ‘Yeah. You’ll get audited.'”
Plastic surgery is similarly a “hard no,” Coughran says. But aside from that and cars, most things are “kind of up in the air, it’s up to the individual creator.”
What else can creators do to save themselves some cash and/or stress?
Coughran says there are some earnings thresholds to keep in mind. Once a creator is making more than $12,000 per year from content, they should think about making quarterly self-employment tax payments to the IRS over the course of the year. Otherwise, come the next April, they’re going to owe a big chunk of change. (For $12K on the nose, it’s a whopping $3,600 in taxes.)
If a creator has the self-control to save 30% of that $12,000 all year long, they may be able to skate by without quarterly payments–but in general, creators should start getting ahead on what they owe by paying early.
Once a creator starts making over $100,000 a year, they should form an S corporation, Coughran says. This will turn their content business into a private corporation the creator owns. The corporation will then receive all incoming cash and pay the creator a salary–thus saving them from self-employment tax.
“I’m shocked by how many creators are making $200,000 a year operating as just an LLC,” Coughran says. “They are overpaying thousands of dollars in taxes.”
Unlike the IRS coming after you for back taxes, you can’t go after it for overpayment–so if a creator has been paying self-employment tax, they can’t retroactively file as an S corp. But they can form an S corp moving forward, and start keeping a bigger cut of the money they make right away.
Ultimately, Coughran says, creators shouldn’t be afraid to treat this career as a business. Content creation is a profession, and creators are small (and sometimes large) business owners. They are entitled to protect themselves from overpaying taxes.
“Set up a separate bank account and keep a good financial record of your income and expenses,” he says. “Running this like a business not only helps from the tax perspective, but it helps from a mindset perspective of growth and diversification of revenue streams. Think of it as a company and not just ‘Oh, this is my YouTube channel.’ No. This is a business. Let’s figure out the systems we need to put in place to make sure it operates well. Treat it like a business, because you are.”
Cookie Finance is a Tubefilter partner.
Filed under: Cookie Finance, Homepage Feature by James Hale
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