Youtube is generally known as two things. Either the boulevard of broken dreams or the digital jungle where dreams are made of. Unfortunately for those that conform to the latter option and are making a living from YouTube, it looks like you’ll soon start paying taxes for your earnings. This change will not affect creators in the United States but will affect the rest of the world.
YouTube Taxes: The Tax Man is Here
As of today, there’s an email going out to YouTube creators who live abroad notifying them of a change to YouTube’s payments. Apparently, Google is now going to deduct taxes for the United States from all channels. This includes even those owned by creators who don’t reside in the United States. The email reads:
Google will be required to deduct U.S. taxes from payments to creators outside of the U.S. later this year (as early as June 2021). Over the next few weeks, we’ll be asking you to submit your tax info in AdSense. This is to help determine the correct amount of taxes to deduct, if any apply. If your tax info isn’t provided by May 31st, 2021, Google may be required to deduct up to 24% of your total earnings worldwide.
Why is this happening?
Well, according to Chapter 3 of the US Internal Revenue Code, Google has the responsibility to collect tax info from all monetizing creators outside of the US. They also have to withhold taxes when income is earned from viewers within the US.
This means that not all income will be affected, but only that earned from viewers within the United States. For instance, if a creator earns KES 100,000 in revenue from YouTube in the last month, only the money from U.S. viewers, eg KES 10,000 will be taxed.
You can check the viewership from your YouTube analytics tab. This will help you understand how much you might pay. For instance if you only have 1% of viewers from the U.S. then the taxation will probably not affect you.
However, until you update your tax info, YouTube will deduct up to 24% of your total earnings worldwide – not just your U.S. earnings. The only way to avoid paying taxes is if Kenya has a tax treaty with the United States. Unfortunately, Kenya does not so you will have to conform to the changes as a Kenyan creator.
The likes of Germany and the UK have tax treaties meaning they will not be paying taxes. For more information on treaties, the guys over at best accounting software have published a guide to tax treaties. It essentially tries to simplify the information on the IRS website.
How To Fill The Tax Form
You can follow the instructions below to submit your tax info to Google. Note that you may be asked to re-submit tax info every three years.
- Sign in to your AdSense account.
- Click Payments.
- Click Manage settings.
- Scroll to “Payments profile” and click edit next to “United States tax info”.
- Click Manage tax information.