The rise of social media has led to a new kind of profession: the social media influencer. Brands have learned that authentic collaborations beyond the celebrity can be an effective and integral part of their marketing strategy. Now let’s think about that in tax terms. To the IRS, social media influencers are essentially independent contractors, despite contact terms; very rarely are influencers considered employees of the companies they work with due to the short term and varietal nature of the work.
If you happen to be a participant of this marketing phenomenon, whether part time or full time, you likely need to rethink your approach to filing taxes. It’s not as glam as live tweeting the latest juice cleanse from your sponsored hotel room, but properly adhering to the tax rules of your new financial situation will help you keep on collaborating and influencing. Take on the tips below, and filing taxes will be a breeze – then you carry on reviewing the newest athletic gear that will spread Instagram #fitspo far and wide.
You will receive this form from each brand you collaborate with that has paid you $600 or more in the tax year by January 31st. You’ll use these numbers when reporting income on your tax return. Make sure you gather all of these forms before you begin filing.
Along with 1099 MISC forms, you’ll need your W2s if the majority of your income comes from traditional employment, and proof of income from any other sources. Additionally, refer to your contractor agreements to compare amounts paid, and don’t forget receipts for reporting expenses. More on that below.
Even if you collaborate with brands on projects that earn you less than $600, and therefore they do not supply a 1099-MISC, you still must report this as income. Crunch the numbers a few times to ensure accuracy. If you don’t have written agreements with these brands, it’s recommended you do so, if not for peace of mind, for secure tax reporting.
As an independent contractor, you’ve likely accrued businesses expenses. The IRS considers business expenses those that are “ordinary and necessary” to carry out the duties stated in your contract. As an influencer, perhaps you’ve taken a few cabs to photoshoot locations, purchased editing apps for the perfect Instagrams, or footed the bill on business lunches. You can deduct these expenses on Schedule C to calculate your AGI.
Whether a full time employee of a business, and/or an independent contractor, you must contribute to Social Security and Medicare. Those that are self employed do so through self employment taxes, since these are not withheld from bi-weekly paychecks. Self employment taxes appear on Schedule SE, which must be submitted with you tax return. Only the net profit from your Schedule C is calculated into self employment taxes, while other income such as investment income are not included.
Income tax is another factor to take into consideration. Instead of paying blindly walking into April with not a clue how much you’ll be paying in taxes (and potentially not receiving a tax refund), you can make estimated tax payments throughout the year. If you didn’t do so last year, 2018 is a good year to start. The amount of frequency depends on how much income you earn. Fill out form 1040-ES to calculate your tax obligations.
With these tips in mind, you’ll be prepared for tax filing in 2018 and also be in the know about what financial considerations to make while you collab, create, and promote. Other tips for a successful tax season include securing solid agreements with all brands you work with, keeping meticulous records of income and expenses (hard copy and digital!), and consulting a tax professional that understands your newly minted financial circumstances.
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