VTuber Tax FAQ
Since it’s Tax season and most VTubers are new to this whole tax thing, here’s a short FAQ. As I have only filed United States of America taxes, this advice is primarily for US taxes, however other countries may have similar tax laws.
Disclaimer:
By no means am I a trained or certified Tax professional. I’ve just been doing my own taxes for over 10 years as a Musician which transitions into VTuber taxes easily. Please do consult a Tax professional to ensure your taxes are filed correctly.
Filing My Taxes
How Do I Know if I have to File my Income?
If you made more than $400 since April 15th (or the tax deadline) from the previous year, you MUST report your income. Likely, Twitch and Paypal will have already reported your income and will provide you with tax forms (more on that in section: Which Tax Forms do I need to get?)
Reporting your income on your tax forms does NOT mean that will have to pay taxes (tax liability). This will depend on the final adjusted taxable income after expenses (see section: What are Expenses?).
Where Do I File?
VTuber taxes and streaming taxes should be filed under Schedule SE (Form 1040 or 1040-SR) and Schedule C as Self-Employment taxes. This may change if you’re part of an agency, please consult your agency management. Your expenses will go there as well.
Which Tax Forms do I need to get?
You will need to get Tax forms from each entity that has paid you during the tax year. Common sources are Paypal and Twitch for VTubers, but are not limited to those.
Typically there are tax sections where you will be provided a 1099-NEC form, which you will need to file with your tax return.
Here is an (nonexhaustive) list of common income sources:
* Youtube
* Google Adsense
* Twitch
* StreamElements/StreamLabs
* Ko-Fi
* Paypal
* Twitter Tips(?)
What are Expenses?
Expenses are anything and everything that you need to run your business. These are filed under Schedule C. This includes things that normally you wouldn’t consider tax deductible under normal employment taxes. Do take full advantage of deductions to bring down your tax liability.
IMPORTANT: You can only write off things that were purchased during the tax year.
CAVEAT: Deductions for expenses should only be done if you can consider your VTubing activities a business rather than a hobby. The IRS guidelines for this distinction can be found here: https://www.irs.gov/faqs/small-business-self-employed-other-business/income-expenses/income-expenses
They can be condensed into:
* Are you profitable? Are you making more money than spending? If Yes, then you might have a business. If not, then it is considered as a hobby.
* Are you at the cutoff to be paying self-employment taxes ($400 USD)? Then you might be able to call it a business.
A short (but non-exhaustive) list of possible VTuber expenses:
* Utilities
* Phone Bill
* Internet Bill
* Electric Bill
* Rent
* Heating
* Home Office
* Calculated based on size or via standard deduction
* Legal and Professional Services
* Art Commissions
* Overlay Commissions
* Emote Commissions
* Live2D Model Commissions
* Live2D Rigging Commissions
* Video Editor Commissions
* Skeb Commissions
* Design Commissions
* Music/BGM/Alert Sound Commissions
* Software
* Adobe Subscription
* Streaming Software
* Game Purchases
* VTube Studio
* Twitch Prime subscription
* Tax Filing Software
* Bookkeeping Software
* Youtube Premium (kek)
* Advertising
* Subscriptions to streamers
* Gift subscriptions to streamers
* Twitch Bits
* Equipment
* Laptop
* Mice
* Microphone
* Sound Interface
* Headphones
* Gaming Controller
* Gaming Console
* Capture Cards
* Computer/Gaming Chair
* Computer/Gaming Desk
* Desk/Floor Lamps
* Elgato Stream Deck
* Webcam
* Cellphone
* Travel and Meal Expenses
* Meetups with VTubers
* Any sort of traveling to conventions or events
* Meals while streaming or traveling.
* Business Fees
* International Transaction Fees
* Paypal Transaction Fees
* Bank Withdrawal and Transfer Fees
Tips and Tricks for Taxes
Receipts and Records
Keep all of your receipts, and records of transactions. This includes emails and any purchases you made. It suffices if you can produce a transaction receipt, for example in the case of Amazon purchases.
Bookkeeping services
With all the expenses and income sources that need to be tracked, it definitely helps to use a bookkeeping service such as QuickBooks or Freshbooks to keep track of things. These services can auto link to your bank and credit card accounts to pull in the transactions automatically and most of these will allow you to automate what transaction gets filed into which category. Additionally, typically they work as an assisting tool and you can have final say in what and which things get reported.
Tax Filing Service
Using a tax filing service such as TurboTax typically helps a lot with sorting out the confusion with filing these forms. I, personally, recommend AGAINST brick-and-mortar tax filing services such as HRBlock or Jackson Hewitt as the employees there are typically minimally trained and are unable to comprehend or handle the scope of a newer industry such as VTubing.
Write off what’s necessary
With the overload on things that can be written off, typically the expenses can far surpass the income. In this case, my advice is to only write off what’s necessary to lower your tax responsibilities. There’s an upper limit to what you can write off before any additional writeoffs contribute nothing more to removing tax deductible income and just become a bigger red number.
Budgeting and Saving
I like to call this “self-taxing”. My personal strategy is to set an automatic withdrawal on my bank account of 25% on all deposits that get sent to my savings, that way I “tax” myself. As such, there is no horrible panic to scramble for cash to pay taxes at tax time, and also you can reward yourself with a “tax return” after paying off your taxes.
Additional Resources:
IRS Resource on Small Business and Self Employment Taxes: https://www.irs.gov/businesses/small-businesses-self-employed/self-employment-tax-social-security-and-medicare-taxes
IRS Resource on Income Expenses: https://www.irs.gov/faqs/small-business-self-employed-other-business/income-expenses/income-expenses
TurboTax resources: https://turbotax.intuit.com/resources/
Special Thanks:
@KashiwaHakase from Twitter for pointing out some issues.