How-ToTax

YouTube Tax For Non-US Creators

YouTube Tax For Non-US Creators

YouTube tax is becoming quite a hot topic. But what is it and should you be concerned.

Let’s start with the most pressing question: do YouTubers pay tax? The short answer is yes. However, come June 2021, not only will tax deductions be compulsory in your country of residence but also in the US, where Google – and Alphabet, Google’s parent company – is based.

This means that if you’re a non-US content creator, you need to be aware of YouTube’s latest tax changes that could see you lose as much as 24% of your earnings.

Many content creators are dreading the YouTube tax changes. However, they may not affect your income as much as you think. Read on to learn more.

YouTube’s Tax Updates And How They Affect Non-US Creators

To comply with US regulations, Google is enforcing strict tax compliance on ALL creators. Since many US creators are already compliant, YouTube is encouraging compliance on Non-US creators who may not have supplied their tax information. The compliance comes into effect in June 2021, when YouTube will start withholding tax from content creators on the Partner Program. However, to ensure Google can process your information in time to do this, the last date to provide your information is May 31, 2021. 

If My Account Isn’t Monetized Should I Be Concerned?

If you aren’t receiving any income from YouTube ads these changes do not apply to you. 

How Much Tax Will I Have To Pay As A Non-US Content Creator?

How YouTube will determine your tax will depend on whether your country of residence has a treaty with the US and how much the US is required to take as a result of that treaty. Your tax withholdings will also depend on how much of your views come from US viewership, as Google will only withhold tax from US viewers.

You can find out how much you will pay by reviewing the IRS Tax Treaty Table. The income content creators earn from ads will be under royalties, in particular, the copyright section on the IRS table. You can find these specific tables on pages 3 and 5 of the IRS tax treaty table.

How Much Will YouTube Deduct If I Don’t Supply Tax Information?

If you don’t supply any tax information, YouTube may need to deduct 24% from your gross income received from ads displayed on your account. That means instead of only having tax deducted from the portion of the revenue you receive from US viewers, you’ll have your worldwide earnings taxed by up to 24%. 

Will I Need To Pay Tax in My Own Country on the Amount Google Deducts?

Generally, you wouldn’t need to pay tax on the amount that has been taxed. But, the authority on this would be your country of residence. Therefore, check with a tax professional to determine how much you will need. 

How To Reduce Your YouTube Tax Withholding

Unfortunately, this is not something you – as a YouTube creator – can control. Your tax withholdings will depend on two things: the country where you reside and how much of your AdSense comes from US viewers.

To truly reduce your withholding, you can either choose to block your content from being available in the US or you can submit the information that YouTube requests of you so you can benefit from a tax treaty.

#1: Submit Your Tax Information

The first step to reducing your tax withholdings is to submit your tax information. This ensures YouTube knows what tax regulations apply to your account. 

You can change your tax information by:

Signing in to your Adsense Account → Click payments → Click manage settings → Scroll to “Payment Profile” and click on edit next to “United States Tax Info” → Click manage tax information.

You can follow the prompts to ensure you fill in the information correctly.

#2: Consider Blocking Content To US Viewers

Once you’ve submitted your tax information, you can consider blocking your content in the US. This will only be worthwhile if a small portion of your viewership is in the US or if the amount YouTube will take from your earnings is more than you consider reasonable. Perhaps, consider talking to an accountant about whether it makes financial sense to block US viewers.

 

As the date approaches for you to submit your tax information, This is a reminder to keep abreast with your countries tax regulations as well as international regulation if you are creating content that can be consumed worldwide.

Disclaimer: 

The materials and information on this post are intended for informational purposes only. The information on this post may not reflect up-to-date tax developments, and it is up to readers to seek out information from a licensed tax practitioner. 

Any opinions expressed on or through this post are the opinions of the individual author and do not reflect the opinions of ForCreators.

Photo by Laura Chouette on Unsplash

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