Non-US YouTube Creators to Start Paying Tax on US Earnings
You may be exempt if your country has a US tax treaty
Just as I was calling it a night (close to 1am), I checked my phone one last time. Instead of the usual checks of social media, catching up on world news and platform analytics, I caught glance at an email that just dropped – it was an email from The YouTube team, announcing that creators outside of the US will start seeing tax deducted from payments as early as June 2021. I was like woah. If you’re a YouTube creator outside of the US, you can fill in your tax info now. An important one to note however that may apply to you – if your country of residence has a tax treaty with the US, you will either pay a reduced rate or be fully-exempt from paying this, or simply 0%. If not, you could be taxed up to 30% depending on your YouTube US viewership earnings.
Anything related to revenue earnings on YouTube, and taxes tend to be a topic less talked about. And that’s completely understandable for full-time creators building a career and business on YouTube and web platforms, much like any traditional company that pays your salary, benefits: financials are a private matter.
But let’s not beat around the bush when it comes to these YouTube earnings and how this tax implementation will affect creators outside of the US (worldwide) and their earnings, since it’s important to know and understand.
If you are not a resident or citizen of the USA and are part of the Google AdSense programme that monetises content on YouTube, you may or may not see additional tax being deducted from your payments from June, 2021. Specifically, this will be taxes based on your US viewership earnings, and NOT on earnings from viewership from all other counties. So just US viewership, got it.
You should have received an email about this and can expect another email in the upcoming weeks, asking you to fill in any tax details required (by you can do it now), in order for them to ascertain if you are liable to pay taxes and how much. The cut off date to fill this in is May 31, 2021, two and a half weeks from now. If you don’t complete this, a universal (default) tax rule may be applied, which is 24% of your US viewership earnings. Ouch.
WHY THE CHANGE?
I’m no US tax expert – or in general for that matter, dabbling in a little financial accounting – but it looks like the IRS are deeming earnings from non-US creators as royalties from a tax perspective, which makes this type of income eligible for tax deduction. Not sure why, don’t know the ins and outs, but it is what it is. It looks like Google are simply following protocol to US government regulations in regards to income, who are obliged to follow, and we as creators are obliged to abide by to their terms and conditions. So it is what it is.
WILL THIS IMPACT ME AS A CREATOR?
It depends. If you reside in a country that has a tax treaty with the US, you will either get a reduce rate or be fully-exempt from paying tax on US income. To see if your country has a tax treaty with the US, check the treaty list on the US Treasury Government website here. Since I am from the UK and we do have a tax treaty, then I and any other creator from the UK are exempt from this. But you do need to fill in the form.
If you’re not from a country that has a tax treaty with the US, applicable tax rates on US viewership can vary between 0% and up to 30% which will be assessed and automatically deducted from your earnings before reaching you.
THE WIDER ADSENSE PROGRAMME?
It is reasonable to assume the changes being implemented on the YouTube platform in regards to taxing US earnings from non-US creators, will flow into the rest of Adsense and that means website owners like myself. Better be safe than sorry. Again, with consideration for your earnings directly related to US readership, this is the portion that may be potentially taxed. I would start to factor this will happen, and even assume it could start the same date as YouTube on June, 2021. But we don’t know for sure.
WHAT SHOULD I DO?
You can already fill in your tax details by logging into your [Adsense account >> Payments >> Manage Settings >> Payments Profile >> Edit US tax info]. That’s all you need to do and I imagine it will be no different then tax forms I’ve had to complete for similar services like with Amazon’s programme. I just want to give a heads up to other non-US creators out there because if the US market is a big part of your earnings (like myself), then it is worth knowing about. So fill in your tax details, check your country of residence tax treaty status, so what needs to be done and no-longer worry about it.