Do You Pay Taxes with OnlyFans?

Do You Pay Taxes with OnlyFans?

OnlyFans has a peaking performance in 2024 with $ 6.3 billion in revenue, surpassing even another growing industry leader, Open AI with $ 3.7 billion in revenue. The platform allows content creators to generate revenue from subscriptions alongside private content sales to individuals. It should be noted that great revenues always come with great taxation liabilities.

Is OnlyFans Income Taxable?

It is correct. The IRS treats content creators as self-employed. In other words, the income generated through OnlyFans must be reported in the relevant tax return. The nature of this income might be distinct like tips, subscriptions or pay-per-view content but reporting obligation remains as the platform does not offer to manage tax implications directly. 

What Forms Do You Need?

It depends on the amount of income generated. OnlyFans platform might present creators with a Form 1099-NEC for nonemployee compensation. The mentioned form is submitted if the annual revenue level is equal to $600 or higher than that. At this point, it is important to mention that even if the content creators did not receive a 1099 form, they still need to perform reporting practices. The additional documents that may be required are outlined below:

• Schedule C (Form 1040): Business income and expenses are reported.
• Schedule SE (Form 1040): Self-employment taxes are calculated.

Deductions

Certain expenses are made by content creators just like in any other self-employment activity so they can benefit from tax deductions for associated expenses. Keeping their content creation practices in mind, the most typical deductions may be outlined as below:

• Equipment and supplies: Cameras, lighting equipment and or props that are used in the process.
• Internet and utilities: A portion reflecting the benefitted amount of the internet bill and utility costs, specifically for home-based professionals.
• Platform fees: OnlyFans commission fees charged for using the platform.
• Marketing and promotion: Expenses concerning advertisement activities.
• Office space: An arm’s length percentage of the rent or mortgage cost mirroring the professional activities conducted.
• Professional services: Accountant, lawyer or consultant expenses in relation to content creation.
• Software and subscriptions: Editing tools and online services fees.
• Clothing and costumes: Items specifically purchased for content creation.
• Depreciation: Deduction for camera, computer, and equipment usage.

Non-Deductibles 

There are typical expenditures that cannot be claimed as deductions since they are not made for business purposes. The most common non-deductible expenses are presented below:

• Personal clothing: Usual day-life clothing that is worn outside of work.
• Personal living expenses: Rent, groceries and other household costs not tied to the business.
• Commuting expenses: Travel between home and a regular work location.
• Personal utilities: Portions of utility bills that are not related to the business.
• Health club dues: Gym memberships, if not required for specific business activities like fitness influencers.
• Home improvements: Renovations or upgrades unrelated to the workspace.
• Unrelated subscriptions: Streaming services or memberships not directly used for business.

Quarterly Estimated Tax Payments

Another major tax consideration for OnlyFans creators is to pay estimated taxes quarterly if they are expected to pay a minimum of $1,000 in taxes annually. Such quarterly payments cover income and self-employment tax (Social Security and Medicare). At this point, the importance of proper recording practices both for revenues and deductions should be recognized as they correlate with the net income. A penalty amount as well as an interest fee is applied when estimated tax payments are not conducted on time.

Accurate Records are Important

A stitch in time saves nine. Managing recording practices for the revenues and expenses in content creation activities is a must for full compliance with the IRS and state-level regulators. The following tips can be followed in order to maintain organized accounting implications:

• A dedicated software for accounting for tracking purposes should be used.
• All receipts and invoices in relation to business-related purchases should be kept.
• A separate bank account can be used for the OnlyFans platform earnings.

We Provide Guidance on Online Content Creator Taxes 

Watter CPA is ready to provide professional guidance required for the taxation practices of OnlyFans content creators. Contact us today for customized solutions and make sure of full compliance. With our more than three decades of expertise and to-the-point solutions, we can assist with tax filing, deductions and tax optimization so that you can focus on your audience and revenues

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