YouTube Will start to deduct U.S Taxes of up to 24% from Creator and this applied for everyone
Google has just sent out an email to a creator on YouTube where there will be having a financial update to many users who are using the platform to make a side income and even full time living, which the message written as:
We’re reaching out because Google will be required to deduct U.S. taxes from payments to creators outside 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. – YouTube
The email which have been sent out to YouTube creator who live outside U.S and Google is now set to deduct taxes from the creator under its obligation as an American-based company and these tax deduction which will also affect creators who don’t live or work in the U.S. According to Google, this is because of Chapter 3 of the U.S Internal Revenue Code which mandates that the company deducts taxes from creators when they generate revenue from U.S based viewers.
If you missed out on the email, Google has set up a support page to clear some confusion up. In essence, you’ll need to submit your relevant tax info via AdSense by the 31st of May 2021, so that Google can correctly calculate your tax deductions (if any). If you fail to provide this info by the stipulated date, you may be subject to a higher tax of 24 percent for your total YouTube earnings.
Example as if a creator in India where they earn $1,000 in revenue from YouTube in last month and their channel $100 were generated from U.S viewer which here are some scenarios:
- Creator doesn’t submit tax info: Final deduction is $240 because the withholding tax rate if you don’t submit a form is up to 24% of total earnings. This means that until we have your completed tax info, we’ll need to deduct up to 24% of your total earnings worldwide – not just your U.S. earnings.
- Creator submits tax info and claims a treaty benefit: Final tax deduction is $15. This is because India and the U.S. have a tax treaty relationship that reduces the tax rate to 15% of earnings from viewers in the U.S.
- Creator submits tax info, but is not eligible for a tax treaty: Final tax deduction is $30. This is because the tax rate without a tax treaty is 30% of earnings from viewers in the U.S.