YouTube Earnings Tax Changes To Impact Creators Outside Of The United States

YouTube Earnings Tax Changes To Impact Creators Outside Of The United States
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YouTube Earnings Tax Changes To Impact Creators Outside Of The United States

Will You Pay Tax additional Tax to the U.S. If You Own a YouTube Channel?

Important tax changes will soon impact monetizing creators outside of the United States.

 

What is the change?

If you’re a creator outside of the U.S., you may begin to have taxes deducted from your U.S. earnings as early as June 2021. If your tax info isn’t provided by May 31, 2021, Google may be required to deduct up to 24% of your total earnings worldwide.

 

Why is the change introduced?

Under Chapter 3 of the U.S. Internal Revenue Code, tax collection is required from all monetizing creators outside of the U.S. and deduct taxes when these creators earn income from viewers in the U.S. As per Google, these U.S. earnings can come from ad views, YouTube Premium Super Chat, Super Stickers, and channel memberships.

 

What does this mean for YouTube channel owners?

YouTube channel owners will be asked to submit your tax information in AdSense.

 

How to submit tax info to Google?

  • Sign in to your AdSense account.
  • Click Payments.
  • Click Manage settings.
  • Scroll to “Payments profile” and click edit to “United States tax info”.
  • Click Manage tax information.
  • Select the appropriate form for your tax situation

 

How to determine the appropriate tax form?

Generally, for creators outside of the U.S., this will be either

  • Form W-8BEN, which is typically for individuals
  • Form W-8BEN-E, which is typically for businesses.

If you are not sure about which forms which needs to fill out, do consult a tax adviser.

 

How much will the YouTube channel owner be taxed?

It depends on the following situations:

  1. If your valid tax form has been submitted or not
  2. How much your channel earns from U.S. viewers
  3. If your country has a tax treaty with the U.S. that you’ve claimed the benefits for

Youtube

How to calculate your U.S. earnings?

  • Go to YouTube Analytics
  • Click on Advanced Mode.
  • Click on Geography.
  • Add a secondary metric under revenue and choose “Your estimated revenue
  • Check U.S. estimated revenue in the list of countries below the graph

 

For example,

If your tax withholding rate is 10% and you make $500 from the U.S. every month. $50 would be withheld monthly.

(Tax withholding is when taxes are deducted from your payments so that they can be paid to a government to satisfy the payee’s U.S. tax liability.)

 

How to check if your tax form submitted?

Once you submit a valid tax form you can find your tax withholding rate in the Payments section of AdSense.

Depending on your country, Tax withholding rates are between 0-30%, which will be applied to your monthly U.S. earnings from AdSense.

 

What will happen if your tax form is not submitted?

Google will consider you’re a U.S. person if you have an individual AdSense account. This means until Google have your completed tax info, it will withhold up to 24% of your total earnings worldwide and not just your U.S. earnings.

 

Example,

YouTube creator outside the U.S. earns $100. Of the $100, their channel generated $10 from U.S. viewers.

Here are some possible scenarios:

Creator doesn’t submit tax info: the final tax deduction is $24 because the withholding tax rate is up to 24% of total earnings worldwide if they didn’t submit tax info

Creator submits tax info and claims a treaty benefitthe final tax deduction is $1.5 (as channel generated $10 from U.S. viewers). This is because India and the U.S. have a tax treaty relationship that reduces the tax rate to 15%. It may vary for other countries.

Creator submits tax info, but is not eligible for a tax treaty benefit: the final tax deduction will be $3. This is because the tax rate without a tax treaty is 30% of earnings from viewers in the U.S.

Tip: Sooner you will fill the tax form, better will be the situation.

 

Does your country have a tax treaty with the U.S.?

Some countries have a tax treaty with the U.S. that can potentially reduce the tax withholding rate on your revenue. So, if you submit your tax info and claim a treaty benefit, your tax rate might be reduced.

 

For example, partners in the UK or Canada may be eligible for a tax rate of 0%

while partners in Mexico or Korea may be eligible for a tax rate of 10%.

AdSense will automatically surface the opportunity to claim a treaty benefit if one exists between your country and the U.S.

 

How to claim a tax treaty benefit?

  • Go to Payments
  • Provide a non-U.S. taxpayer identification number in the Tax identity section in AdSense.

Check out the link in the description to the IRS website.

 

FAQs

How will this affect your income on YouTube?

Only the portion of your earnings from viewers in the United States will be subject to tax withholding and reporting if you provide valid tax information.

 

Does this mean I will be taxed both in my country of residence as well as in the U.S.?

Google is only required to withhold U.S. taxes from your YouTube earnings from viewers in the U.S. Your local income tax laws may still apply to your YouTube earnings.

 

Does this apply to my other AdSense earnings aside from YouTube?

If you provide valid tax info, the U.S. withholding taxes under Chapter 3 should only apply to your YouTube earnings.


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