YouTube 2021 Tax for Creators – Answering common questions

YouTube has just announced that, starting June 2021, taxes will be withheld from YouTube creators earning, for a tax fee up to 24%. But, does it apply to all earnings or just for income of views coming from the US? Can you at this point pay less taxes in your own country? We will try to answer this below, but first, let’s see what the email sent by YouTube states.

I already read the email. Bring me to the FAQ!

Hi there, we’re reaching out because 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 to determine the correct amount of taxes to deduct, if any apply. If your tax info isn’t provided by May 31, 2021, Google may be required to deduct up to 24% of your total earnings worldwide.
What do I need to do?
In the next few weeks you will receive an email to submit your tax information in AdSense. The online tax tool in AdSense is six steps and will ask you a series of questions to guide you through the process to determine if any U.S. taxes apply. For more information on these changes and a list of tax info to prepare, visit our Help Center.
Why is this happening?
Google has a responsibility under Chapter 3 of the U.S. Internal Revenue Code to collect tax info from all monetizing creators outside of the U.S. and deduct taxes in certain instances when they earn income from viewers in the U.S.
For creators outside of the U.S., we will soon be updating our Terms of Service where your earnings from YouTube will be considered royalties from a U.S. tax perspective. This may impact the way your earnings are taxed, and as required by U.S. law, Google will deduct taxes.
How will my earnings be impacted?
If you provide your tax info, U.S. taxes may only be applied to your monthly U.S. earnings from AdSense (revenue earned from viewers in the U.S. through ad views, YouTube Premium, Super Chat, Super Stickers, and Channel Memberships). If no tax info is provided, your tax rate may default to the higher individual backup withholding rate (24% of total earnings worldwide). To estimate the potential impact on your earnings follow these instructions.
Thanks,
The YouTube Team
A screenshot of the email that worried lots of content creators around the world. But now, it’s time to make some clearance about the topic.

So, let’s dive a little bit deeper in the matter.

Common questions and answers regarding YouTube 2021 Tax

  1. Common questions and answers regarding YouTube 2021 Tax
    1. Does everyone need to provide tax info to YouTube?
    2. What will the YouTube tax percentage fee be?
    3. How will the YouTube tax affect US creators?
    4. And what if you live outside the US? What will the tax fee percentage be?
    5. How will the new tax affect YouTube income?
    6. How is my country of residence decided?
    7. Where do I send my tax info?
    8. If I am part of a MCN, will the YouTube Tax still affect me?

Does everyone need to provide tax info to YouTube?

Yes, every creator, regardless of their location in the world, is required to provide U.S. tax info to Google, also those channels under a MCN.

What will the YouTube tax percentage fee be?

This varies from country to country, with an international fee up to 24% for individuals and 30% for business. So, the tax withholding requirements and fees differ depending on your country of residence, whether you’re eligible to claim tax treaty benefits, and whether you identify as an Individual or a Business. 

How will the YouTube tax affect US creators?

Google will not withhold taxes on earnings if you have provided valid tax info.

And what if you live outside the US? What will the tax fee percentage be?

If you submit U.S. tax info, withholding rates are between 0-30% on earnings you generate from viewers in the U.S. and depend on whether your country has a tax treaty relationship with the United States. Specific tax rates for each country are not known yet. Once the tax will be effective, all creators will be notified of their fee percentage after submitting their tax info in Google AdSense.

Important: If no U.S. tax info is provided, “Google may be required to withhold using the maximum tax rate. Your tax rate will depend on your AdSense account type and country”. For this reason, we strongly recommend sending tax info as required by Google. If you don’t, the maximum country fee will be applied.

How will the new tax affect YouTube income?

Only the portion of your earnings from viewers in the United States will be subject to tax withholding. The exact rate of tax withholding will be determined by the tax info you provide to Google. You can view your tax withholding rate in the Manage tax info section in your AdSense Payment Settings once you submit your form. Tax withholding amounts are not visible in YouTube Analytics.

How is my country of residence decided?

The country of residence will depend on how you fill the tax form. YouTube will determine your location from the country of residence you declare in the tax info you provide them.

Where do I send my tax info?

Simply login to the Adsense account linked to your YouTube channel, and you will see a notification that requires you to send tax documents. Click on it and then proceed to provide the required info. To ensure that withholding taxes are calculated properly, your AdSense account should be in your legal name or the legal name of your business. Also, the address information on file should match your permanent residence for tax and legal purposes.   

If I am part of a MCN, will the YouTube Tax still affect me?

Yes, you need to provide tax info in the AdSense account linked to your channel. This information is used to determine withholding taxes, if any apply.  Your channel’s revenue will continue being paid out to your MCN partner. If any withholding taxes apply, these will be withheld from the payment made to your MCN for your channel’s revenue. The withholding amounts will not be visible in YouTube Analytics. Your MCN will be given a report on a monthly basis outlining the total amount of U.S. taxes withheld. 

Please consult your tax advisor if you need more information about your specific case.

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