9 YouTube Tax Forms You Must Know About As a YouTube Creator
In this article, you will learn:
Are you a YouTube creator who does not know the YouTube tax forms that apply to you? Does YouTube give you a tax form? Don’t worry as we have got you covered. Google is required under Chapter 3 of the Internal Revenue Code to collect tax information, withhold taxes, and report payments (such as AdSense, royalties, etc.).
YouTube creators like you receive from Google under its YouTube Partner Program to the IRS. To meet this obligation, Google will send you various Google AdSense tax forms in your Google AdSense account.
Various monetizing YouTube creators across the world receive different YouTube tax forms, depending upon the location they are based in and the type of payments they receive from Google. While some YouTube tax forms are simply for collecting tax information purposes to enable Google to decide the correct rates at which taxes would be withheld on the YouTuber’s earnings, others are for reporting payments received by such creators from Google to the IRS.
In this article, we will help you know everything, right from the purpose of these YouTube tax forms to the forms you should fill out as a monetizing YouTube creator to avoid being taxed on the maximum withholding rates.
1. Tax Forms For Providing Tax Information
As mentioned earlier, Google is responsible under Chapter 3 of the Internal Revenue Code for collecting tax information from all monetizing YouTube creators throughout the world, irrespective of their location. This is to help Google determine the correct tax rates at which to withhold the earnings of YouTube creators under its YouTube Partners Program (YPP).
In the case of creators who do not provide tax information within the stipulated time, Google has no choice but to charge the maximum withholding tax rates of up to 30% on the YouTube creators’ worldwide earnings. Therefore, you must provide valid and accurate tax information to Google within a specific time to avoid getting taxed at the highest rates.
Do YouTubers Pay Tax?
(i) Creators Based in the US
If you are a monetizing YouTube creator based in the US, you are liable to pay both income tax and self-employment tax on your YouTube earnings. This is because you are not an employee but a self-employed individual or entity in the eyes of the IRS that is earning income from viewers based in the US. Thus, you’ll be required to pay both income tax and self-employment tax from your earnings from the US viewers if you are a US-based creator.
(ii) Creators Based Outside the US
If you are a monetizing YouTube creator based outside the US, Google will be bound by the law to deduct withholding tax on your YouTube earnings from the viewers in the US. That is, Google will deduct withholding tax from your YouTube earnings only if such earnings are from viewers in the US.
Google will not charge withholding tax on your YouTube earnings if these do not come from viewers in the US. However, your local income tax laws will still be applicable which may require you to pay income tax on your YouTube earnings.
Also Read: How To Do Taxes For My YouTube Business?
What is Tax Withholding And Why Should You Bother As a YouTube Creator?
As per the US Tax laws, Google is a withholding agent and is required to deduct withholding tax from the relevant YouTube earnings of its creators. Withholding tax is nothing but the tax that is deducted from the payee’s earnings so that such a tax can be paid to the US government to fulfill the payee’s tax liability.
Accordingly, Google deducts withholding tax only on YouTube earnings from viewers in the US. That is, out of your total YouTube earnings, only the portion of your YouTube earnings from the viewers based in the US will be subject to tax withholding and reporting, provided you submit valid and accurate tax information to Google. Therefore, all monetizing YouTube creators, whether based in the US or outside, must submit Google AdSense tax information using tax forms applicable to you within a specific period to help Google determine the correct withholding tax rates and avoid deducting withholding tax on maximum withholding tax rates of up to 30%.
In case you fail to submit Google AdSense tax information within the stipulated time, Google will deduct withholding tax on maximum withholding tax rates of up to 30% on your worldwide YouTube earnings, which can mean a good portion of your YouTube earnings being deducted as withholding tax.
Withholding tax rates differ based on:
- whether you are a business or an individual
- your country of residence, and
- whether you are eligible to claim the tax treaty benefits.
Now that we know why and in what circumstances Google deducts withholding tax on your YouTube earnings, let’s have a look at the type of YouTube tax forms used for submitting tax information to Google.
YouTube Tax Forms for Submitting Tax Information To Google
1. Form W9 – For US-based Tax Creators
If you are a US-based monetizing YouTube creator, you will receive a W9 form from Google under the ‘Payments’ section of your Google AdSense account to provide your tax information. This includes providing valid tax details such as your TIN, etc. For federal tax purposes, you will be treated as a US person if you are:
- an individual who is a US citizen or US resident alien
- a corporation, partnership, company, or Trust that is created in the US or by the laws of the US
- an Estate (that is not a foreign estate)
- a domestic Trust
However, Google making royalty payments to you as a YouTube creator, in certain circumstances, may be required to withhold taxes on such payments at the rate of 24%. This is when you –
- do not submit your TIN details to Google
- do not certify your TIN when required
- provide incorrect TIN details
- do not report all your dividends and interests on your tax returns
- do not certify to Google that you are not subject to withholding for reportable interest and dividend
So if you as a US-based creator submit valid TIN details to Google, it will not withhold any taxes from your YouTube earnings.
2. Form W-8BEN or Form W-8BEN-E For Foreign Creators
If you are a foreign or non-US individual receiving payments from US sources, YouTube royalty payment in this case, you will receive form W-8BEN from Google. Foreign entities, on the other hand, receiving payments from foreign sources, royalty payments from YouTube in this case, will receive W-8BEN-E from Google under the ‘Payments’ section of the Google AdSense account.
a. Form W-8BEN
This form is for foreign individuals who receive certain incomes from US sources. Such persons are taxed at the rate of 30% on the earnings they receive from US sources which includes payments like royalties from YouTube. The tax is typically collected by a withholding agent, Google in this case.
Google will depend on the tax information foreign creators submit in their W-8BEN forms, even for applying the tax treaty benefits such as reduced rates or tax exemptions if such treaties exist between the US and the country of residence of the foreign creators.
That is why, foreign creators need to complete their W-8BEN forms and submit the same to Google before the stipulated time. Failure to submit such tax information to Google will require Google to withhold taxes at the maximum rate of 30% on the worldwide earnings of the foreign creators, which could mean a good amount of money to be paid as withholding tax.
Remember, if you are a foreign creator and there exists a tax treaty between your country of residence and the US, you will be able to claim the tax treaty benefit only if you submit your completed W-8BEN form to Google before time.
Therefore, if you receive certain types of income from US sources (like YouTube royalty payment) you must submit form W-8BEN to :
- indicate that you are not a US individual
- claim that you are the beneficial owner of the income for which form W-8BEN has been given to you
- claim a tax treaty benefit such as a reduced tax rate or tax exemption if such a treaty exists between your country of residence and the US and if it applies to you.
b. Form W-8BEN-E
This form is for foreign entities that receive certain incomes from US sources. Such entities are taxed at the rate of 30% on the earnings they receive from US sources which includes payments like royalties from YouTube. In this case, the tax is typically collected by a withholding agent, Google.
Google will depend on the tax information foreign entities submit in their W-8BEN-E forms, even for applying the tax treaties benefits such as reduced rates or tax exemptions if such treaties exist between the US and the country of residence of the foreign creators.
That is why, foreign creator entities need to complete their W-8BEN-E forms and submit the same to Google before the stipulated time. Failure to submit such tax information with Google will require Google to withhold taxes at the maximum rate of 30% on the worldwide earnings of the foreign creator entities, which could mean a good amount of money to be paid as withholding tax.
Remember, if you are a foreign creator entity and there exists a tax treaty between your country of residence and the US, you will be able to claim the tax treaty benefit only if you submit your completed W-8BEN-E form to Google before time.
Therefore, if you receive certain types of income from US sources (like YouTube royalty payment) you must submit form W-8BEN-E to :
- claim your foreign entity status
- claim that you are the beneficial owner of the income for which form W-8BEN-E has been given to you
- claim a tax treaty benefit such as a reduced tax rate or tax exemption if such a treaty exists between your country of residence and the US and if it applies to you.
3. Form W-8ECI
Form W-8ECI is used by foreign persons who receive income or are deemed to receive income that is effectively connected with the conduct of trade or business in the US. Although foreign persons are typically subject to a 30% withholding tax rate on their income from foreign sources, foreign persons who earn income or are deemed to earn income that is effectively connected with the conduct of trade or business in the US are not subject to any withholding.
Accordingly, you as a YouTube creator will use form W-8ECI to:
- indicate that you are not a US person
- claim that you are the beneficial owner of the income for which form W-8ECI is being sent to you or you are an entity that is engaged in trade or business in the US and submitting form w-8ECI on behalf of the owners, partners, or beneficiaries
- claim that your income is effectively connected with the conduct of trade or business in the US
You must submit your completed form W-8ECI to the withholding agent, Google in this case, so that it can depend on the tax information provided in the form and can exempt you from the withholding tax since your income is effectively connected with the conduct of trade or business in the US. Make sure that you provide your completed W-8ECI form before time. Failure to do so may require Google to withhold tax from your worldwide YouTube earnings at 30%.
4. Form W-8IMY
Form W-8IMY is used by intermediaries, flow-through entities, and partnerships outside of the US. To know which foreign intermediaries, partnerships, and flow-through entities must provide Form W-8IMY, you can check the IRS’s instructions for Form W-8IMY.
Since Google is the withholding agent in case you are a monetizing creator under YPP, you must provide the completed form W-8IMY Google before the stipulated time. Failure to do so may require Google to withhold taxes at 30% on your YouTube worldwide earnings.
Typically, foreign persons are subject to a US tax at the rate of 30% on the income they receive from US sources consisting of rent, annuities, dividends, premiums, interest, or compensation for, or in expectation of, services rendered, or other annual or periodical gains.
However, entities like foreign governments, international organizations, foreign central banks of issue, foreign tax-exempt organizations, foreign private foundations, or a government of a US possession use Form-8EXP to claim a reduced rate of or exemption from tax withholding.
Accordingly, if you are any of the above entities, you must complete form-8EXP t0:
- determine that you are not a US person
- claim that you are the beneficial owner of the income for which form-8EXP has been provided to you
- claim a reduced rate of or exemption from tax withholding
Also, you must submit the completed form to the withholding agent, Google in this case, within the stipulated time with all the additional documents required. This is because the withholding agent will rely on your completed form-8EXP to exempt you from a 30% tax withholding rate or a reduced withholding rate of 4% in some cases.
Failure to submit form-8EXP before time will require Google, your withholding agent, to withhold tax at the maximum rate of 30% from your worldwide income from YouTube.
2. Tax Forms For Reporting Returns
Any business or self-employed entity making payments during the calendar year as part of their trade or business is required to file information returns to the IRS.
Various 1099 forms such as form 1099-NEC, 1099-Misc, 1099-K, etc are used to report different types of payments made by an individual or an entity as part of its trade or business during a calendar year. Since Google makes payments to content creators on YouTube as part of its business during the year, it too is required to report such payments to the IRS using various 1099 forms.
You as a monetizing content creator receive a copy of the information return filed by Google to the IRS. You can use the information contained in such a return while filing tax returns in your country.
Let’s look at the various tax forms for reporting returns that you can receive, depending on the type of payments you receive from the IRS.
a. Form 1099-NEC
A business or an individual will file form 1099-NEC (Non-Compensation Employee) for every person to whom it has paid at least $600 in:
- services performed by anyone who is not its employee
- payments to an attorney
Starting from 2020, Form 1099-NEC is used for reporting payments made by an individual or entity to independent contractors and non-employees.
Before 2020, form 1099-Misc was used to report non-employee and independent contractor payments. Additionally, form 1099-NEC is also filed for every person from whom a business or an individual withholds federal income tax under tax withholding.
Accordingly, Google will file form 1099-NEC for you as a monetizing YouTube creator if it pays you a minimum of $600 for your services as a non-employee or in cases where it withholds federal income tax from your payments.
Upon filing form-NEC, it will send you a copy of the same under the ‘Payments’ section in your Google AdSense account. You can download the same and use the information contained in the form while filing your income tax return.
b. Form 1099-Misc
Form 1099-Misc is filed for every person to whom an entity or individual makes the following miscellaneous non-employee payments during the year as part of its trade or business.
- At least $10 in royalties
- At least $600 in:
- other income payments
- awards and prizes
- cash paid from a notional principal contract to an individual, partnership, or estate
- any fishing proceeds
- medical and healthcare payments
- crop insurance proceeds
- gross proceeds paid to an attorney
- section 409A deferrals or
- non-qualified deferred compensation
Additionally, form 1099-Misc is also filed for every individual from whom a business withholds federal income tax under the withholding rules.
Accordingly, Google will file form 1099-Misc for every person (or every monetizing YouTube creator) to whom it has paid $10 or more in royalties, at least $600 in prizes and awards, and other income payments, or has withheld federal income tax from his income under withholding rules.
Therefore, if you have received a minimum of $10 in royalties from Google or are a person or entity whose tax has been withheld by Google, Google will send you a copy of form 1099-Misc under your ‘Payments’ section in your Google AdSense account, which you can download as a monetizing YouTube creator for later use while filing your tax returns in your respective countries.
c. Form 1099-K
Form 1099-K is filed by a Payment Settlement Entity (PSE) for the payments it makes in the settlement of reportable payment transactions during a calendar year. A PSE makes payment in the settlement of reportable payment transactions like payment cards or third-party network transactions if it sends the instruction to transfer funds to the participating payee’s account in order to settle the reportable payment transaction.
What is a PSE?
A PSE may be a domestic or foreign entity which is a merchant acquiring entity such as a bank or any other organization that is obligated under a contract to pay participating payees in settlement of payment card transactions. Additionally, PSE can also be a third-party settlement organization (TPSO), much like a central organization, that is obligated under a contract to make payments to participating payees of third-party network transactions.
Who Is A Participating Payee?
A participating payee is any person who accepts a payment card, account number, or any other data linked to the payment card as payment or the one who accepts payment from a TPSO in the settlement of a third-party network transaction.
What Is A Third-Party Payment Network?
A third-party payment network is an arrangement that:
- allows to establish accounts with a central organization by a good number of goods and services providers (also called participating payees) who are unrelated to such an organization and who have agreed to settle transactions for providing goods and services to the buyers as per the terms of the arrangement
- provides standards and mechanisms for settling transactions
- gives a guarantee of payment to participating payees in the settlement of transactions with the buyers to carry out the arrangement.
Accordingly, in the case of monetizing YouTube creators accepting payment cards for Super Chats, Super Stickers, etc., Google is the PSE that is obligated to make payments to the monetizing YouTube creators, the participating payees, in settlement of the payment card transactions. Thus, Google is obligated to file form 1099-K with the IRS and send a copy of the same to the YouTube creators accepting payment cards on their YouTube channel.
So, if you are one of the creators accepting payment cards for providing Super Chats, Super Stickers, etc. to the purchasers on your YouTube Channel, Google will file form 1099-K and send a copy of the same to you, which you can access under the ‘Payments’ section in your Google AdSense account.
d. Form 1042-S
Form 1042-S is filed by every withholding agent who makes payments during the calendar year as part of their trade or business that is subject to reporting on Form 1042S.
These payments typically include the amounts from the US sources that are paid to foreign persons including the persons who are presumed to be foreign or the ones that are included in the US payee pool that are reportable under chapters 3 and 4, even if no amount is withheld owing to a tax exemption or a tax treaty.
Some of the amounts that are subject to reporting on form 1042-S include royalties, compensation for independent personal services performed in the US, etc. For the complete list, you may check the instructions for form 1042-S provided on the IRS website.
Accordingly, Google, as a withholding agent, must file form 1042-S to the IRS for all the non-US or foreign YouTube creators to whom payments are made. Remember, such payments must be amounts from the US sources, that is income earned by non-US YouTube creators from US viewers.
Also, Google is obligated to withhold 30% of any payment made to foreign persons unless it establishes that such a payment made to a foreign person is subject to tax redemption or a reduced tax rate owing to a tax benefit treaty.