Being an influencer apparently isn't all it's cracked up to be, especially when the tax collector gets involved.
Sure, some of those ubiquitous TikTok videos are just for fun. Others, however, can make big bucks for their online creators. That happens when the viral stars are paid influencers.
In most cases, the influencers work as independent contractors for the companies they endorse.
SE and income tax due: This self-employed status, reminds the Internal Revenue Service, means the online promoters must pay self-employment (SE) tax in addition to income tax on their earnings.
SE tax is the independent worker's version of Social Security and Medicare taxes, sometimes shown on pay stubs as FICA for the Federal Insurance Contributions Act that authorized them, that are withheld from traditionally employed workers' paychecks.
Even if your influencer efforts are in addition to a salaried job where FICA taxes are withheld, you still must pay SE tax on the income you earn as an independent contractor.
Also make sure you meet your state tax obligations as far as your influencer earnings. If you work for companies outside of your home state, you may have to file multiple state tax returns.
Worldwide tax collector interest: But before you blast the IRS, consider that things could be worse. You could be a Russian influencer who is the target of that nation's recent crackdown on these internet earnings.
Russian tax officials reportedly are working to identify and notify tax-evading influencers whose earnings they contend have exceeded 150 million rubles, or $1.9 million, since 2022.
Russian Instagram stars who market self-help courses are the "public face" of these efforts, according to Moscow's business daily newspaper Vedomosti (and Google translate). Several of the online influencers have been arrested.
The Moscow Times reports (in English, thank goodness) that —
The [Russian] Federal Tax Service and Finance Ministry have not publicly commented on the contents of Vedomosti's report, which the outlet said were confirmed by an unnamed source close to the tax service and a second source close to the cabinet of ministers.
The report comes days after law enforcement authorities arrested Yelena Blinovskaya, a popular life coach and self-help blogger, at the border on accusations of money laundering and failing to pay 918 million rubles ($11.3 million) in taxes.
Blinovskaya was placed under house arrest ahead of her trial and banned from using the internet.
On Tuesday [May 2], the Federal Tax Service appeared to have targeted yet another popular blogger, model Oksana Samoylova, after it suspended financial operations for two companies she owns, according to data from SPARK-Interfax.
I know, you now, like me, are thinking about Brittney Griner and Russian jails. Sure, the U.S. tax laws are challenging, but the consequences don't generally seem as scary as those in Россия.
The worldwide crackdown on self-employment earnings, either from promotions going viral online or other more mundane contractor gigs, also is a good reminder to follow the tax laws wherever you live and work, or face the consequences.
You also might find these items of interest:
- 5 tax tips for freelancers, gig economy workers
- Got more than wage income? Here's how to report it.
- Italy PM seeks to ease limits on cash transactions, despite tax evasion concerns
- Employee or contractor? The IRS has some guidelines on when each work status applies
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