Over the last year, millions of Americans have sheltered in place to avoid spreading (or catching) the novel coronavirus, COVID-19. While stuck at home, away from friends and family, away from their jobs and away from normal social activities, those isolated people turned to a new video-sharing social network called TikTok. Using this app, users could make their own creative short films and music videos and share the result with a community of rabid consumers looking for a laugh or smile to relieve them of their shelter-in-place boredom.
For some people who used TikTok in Hayward, CA, those videos might have proven more than fun—they might have actually been somewhat lucrative. If this sounds like you, when tax time rolls around, you’ll want to be ahead of the game when it comes to your TikTok earnings.
Here’s what you need to know.
Take good notes
The most essential thing to do when you set out on your TikTok career is keep track of any income you receive as a result. If your annual income exceeds $600, you are legally obligated to report that income to the IRS. You’ll need to use either a schedule C or 1099, as appropriate.
A tax professional familiar with TikTok in Castro Valley, CA can help you determine which method of reporting is right for you.
Make your work work for you
Keep in mind, when you’re earning money as an independent music and film maker on TikTok, your preferred recording, mixing and editing locations are no longer purely personal space. They’re an office. The equipment you use, the furniture you sit on and even the space itself can be used to deduct the tax burden on your TikTok videos. Discuss with your tax expert how your home office can serve you come tax time.
Set aside some earnings
One of the most common (and unfortunate) things TikTok users overlook when collecting their earnings is the tax implications. As a TikTok user, you are considered a freelancer. In a traditional employment situation, your employer pays part of your tax obligation to the government. As a freelancer, you work for yourself. In the eyes of the government, that means you are responsible for paying the taxes covered by both the employer and the employee.
Long story short: set aside some of your TikTok earnings and discuss scheduled IRS payments with your CPA.
Get help at tax time
If you’ve reported some income as a TikTok producer in San Leandro, CA, the skilled professionals at Menjivar & Company CPAs, Inc. can help. Our certified tax professionals are on the cutting edge of tax law. Let one of our friendly team members help you navigate tax time with ease and clarity.
Since we opened our doors in 1978, we’ve proudly served the greater Hayward, Castro Valley and San Leandro areas with comprehensive financial assistance. We do it all: tax prep, audits, bookkeeping, payroll and more.
Whether your needs are commercial or residential, you deserve unparalleled attention to detail and qualified help with your taxes in Hayward, CA. You deserve Menjivar & Company CPAs, Inc. Contact us today to find out more or schedule an appointment.
Categorised in: Tax Tips