They Went Viral and Made Money. Now They Owe Taxes.

Tony Hoong, a C.P.A. who posts on TikTok using the handle @thecpadude, helps creators get set up with a quarterly or biannual tax filing. “There’s folks that know the tax is there but don’t want to do it at all,” he said. Some clients, accustomed to employers withholding funds for them, “are just blown away by the amount of the tax bill,” he added. Ms. Collazo Perez is among his clients.

Katherine Studley, a tax accountant, posts on social media as The Only Consultant and helps a roster of OnlyFans creators with their taxes. “These are complex returns — not standard Schedule C,” she said of her clients’ filings, adding that some need to consider items like S corporations, payroll and assistants.

The needs of these creators vary — and fortunes can change quickly. “If you go viral, you might make $80,000 in one month,” Ms. Studley said. “Some clients are 19 and haven’t heard of a 1099.” Others, she said, may need to issue 1099 forms to their own contractors.

She recommends that creators make professional bank accounts. “Have all of your spicy income deposited into that account,” she said she advised her clients.

Eric Wei, a co-founder of Karat, a financial services company for creators, said some people suddenly earning online might panic and “ask their mom’s friend’s uncle’s fraternity brother” for help with accounting. “Many times that person who comes from a more traditional tax background has no idea how a YouTuber actually makes money,” he said.

Article source: https://www.nytimes.com/2023/02/25/business/content-creators-viral-taxes.html