OnlyFans Taxes: IRS Approach

Editorial team of TFX

• 30.10.21 • 5 min read

What Is OnlyFans?

OnlyFans is a British startup founded by an entrepreneur in 2016 and is based in London. Content creators and artists who use this platform will be able to monetize their content while at the same time building meaningful relationships with their fans. The company lets users publish content behind a paywall, so subscribers must subscribe before they can view it. Additionally, fans can tip creators so they will come up with content tailored to their tastes and interests based on their messages or "tip."

Do You Have To Pay OnlyFans Taxes?

In the United States, you must pay taxes on the money you earn through OnlyFans. To determine the amount of tax you owe, you must add up all of the money you earn from subscriptions, pay-per-view, tips, and donations. Depending on what you paid for to run your account, you may be able to deduct some of those expenses.

Influencers who earn income are required to pay taxes on their total earnings for the year. The amount of taxes owed will depend on how much has been earned after deducting any tax deductions.

A simple question many influencers ask is: Does being an influencer count as self-employment? A self-employed person is one who works for himself instead of an agency or a big company. As both the employer and employee, you will have to pay your taxes for any income that you earn.

How Does OnlyFans Tax Work?

When determining whether your activity is a hobby or a business endeavor, keep in mind all the relevant facts and circumstances. Hobbies are activities that are not aimed at making a profit. These include activities carried out primarily as a sport, recreational, or pleasure activity. It is impossible for any single factor to determine the outcome.

In 2018, the IRS suspended the ability to itemize hobby-related expenses. Hobbyists will not qualify for any deductions due to this rule. Therefore, you must pay only income tax on income generated from hobbies, since there is no self-employment tax.

Those who are career influencers will have to pay both self-employment and income taxes.  Taxes on self-employment are set at 15.3% this year. Influencers' income is considered to be involved with the "business" they work for (even if they actually work for themselves).

If you need help determining whether your influence at OnlyFans is a profession or a hobby, the IRS serves as a guide. The following are among them:

• You are treating your OnlyFans account as a business if you are actively looking for ways to make it profitable.

• Your OnlyFans account is likely to look more like a business than a hobby if you track your income and expenses.

• Your OnlyFans account would qualify as a business if you needed the money you earned through it.

• It is most likely that the IRS will consider financial losses that are caused by your influence to be a business loss, even if they are uncontrollable.

• If you continually improve your account's performance in order to earn more from it, you are managing things like a business.

• Your prior money-making business ventures on social media.

• Whether or not the activity is profitable in some years, as well as how much profit it grosses.

• You may be estimated how much you will earn if you continue to influence people at the level you are currently at or the future appreciation of the assets you will use for the activity.

Every influencer is required to submit tax returns according to regulations set by their governments. If you are resident in the United States and earn more than $600 from OnlyFans, you should receive a 1099 form from the different brands you receive payment from. If you sign up with OnlyFans, you'll need to fill out a W-9 form and they'll send you (and the IRS) information about your taxes at year's end.

How To File Taxes For Onlyfans

When it comes to federal taxes, understanding deductions and tax brackets is crucial, especially when integrating small business tax planning into your financial strategy.

As a hobbyist, you are liable for taxes on any income generated. If you earned over $600, any brand you work for should send you a 1099 form. You should include it in the taxable earnings section of form 1040.

In order to deduct your business expenses from your total income, you should first add up all your expenses. Those remaining amounts will be taxable earnings for you. Your Schedule SE must be filled out using Schedule C to indicate that this is the case. On Schedule C, you list your earnings and expenses to determine how much profit you made.  Combined with other income and deductions, it is added to the main form 1040 to determine your taxable income.

The Social Security and Medicare tax equivalent (FICA) can be computed using Schedule SE. There are also what is known as "Self Employment Taxes" (often called simply "SE Tax"), and they are imposed separately from income tax.

When you have determined your taxable income, consult this year's tax table to figure out how much tax you owe. As an example, you will not be responsible for paying 24% of your income (if you are single) if you make $120,000 and are in the 24% tax bracket. It works like this: you are taxed 10% on the first $9,950, 12% on the difference between $9,951 to $40,525 earned, and so forth. Income that is subject to 24% tax is that which exceeds $86,375.

The income tax tables for each state may vary, but for the most part, they will operate the same way. If you itemize your deductions, state income tax may be deductible from your federal taxable income, depending on your state tax bracket.