Tax is confusing at the best of times, let alone when you have to sort it out yourself. When it comes to self-employment, the tax you need to pay is not automatically taken – and so, how exactly do you pay the tax that you need to?
OnlyFans Tax in the US
The amount of tax you’ll need to pay will depend on your income from the site. If you use Onlyfans as a hobby, you will only need to pay income tax. This needs to be filed on a taxable earnings form – line 1040. This is specifically for content creators who use Onlyfans as a hobby and not their actual career and sole income.
You are responsible to pay self-employment tax as well as income tax if you use OnlyFans as your career. Currently, this rate is 15.3% of the total amount that you have earned.
Because the IRS will consider your payments as a ‘business, there are also other forms of tax that you will need to pay.
You need to consider your Onlyfans as a business, to calculate and pay the correct amount of tax. This includes medicare tax as well as social security which needs to be paid for the employer and the employee.
The rates for both of these at the moment are 6.2% and 1.45% – totaled at 12.4% and 2.9%. Your self-employment tax is calculated from your net earnings, which means you might not have to pay as much money as you think.
Additionally to your self-employment tax you have to income tax. This is based on the amount of money you make during the year, meaning it will vary depending on the amount that you have made.
Tax laws will differ depending on where you live and how much money you receive from the content that you create. If you make a yearly income of $600 or more, Onlyfans will issue you a 1099 tax form that you need to file when the time comes.
It would be smart to keep aside and save around 30% of any of your earnings so that when the time for paying tax comes you will have the money to do so. Because you have to file it yourself, you’re not going to know the exact amount you’ll need and so it’s better to be safe than sorry and have more than enough put aside.
OnlyFans Tax in the UK
Any income that you make from content used on OnlyFans must be taxed. When you work for a company, they usually have a system that will automatically subtract the tax you need to pay from the sum of your payslip.
OnlyFans does not automatically apply this to users and so you must do it yourself through HMRC. The income you make, if you are not working through a limited company, is subject to tax and national insurance – this means you must file PTR (Personal Tax Returns) with HMRC for any profit that is made. This is important for you to do because if you don’t you can get fined a large amount of money!
The amount of tax that you will need to pay depends on any other income and earnings you may receive, as well as the amount you earn from OnlyFans. This includes any other jobs that you have that contribute to your overall gross salary.
Then you must file your PTR to HMRC for any profit that you have made on the site. To calculate the earnings that need to be filed, you must include any that you received from the last tax year. Perhaps now you are wondering how you calculate that?
Well, the personal tax year runs from the 6th of April to the following 5th of April of the year after. When it comes to filing your payments, the deadline is the 31st of January the year after the tax year ends.
For example, the tax year would be from the 6th of April 2020 to the 5th of April 2021, and the deadline for payment would be the 31st of January 2022.
You need to file your PTR for every year that you made income from your content on the site. So, the amount of money you made between those dates each year you were creating the content, is what your tax rate will be calculated from.
It is in your best interests to notify HMRC immediately when you need to file your PTR. They’re going to go easier on you, the sooner that you do so. You must start in whatever tax year that your OnlyFans account was opened.
HMRC will then issue you a Unique Tax Reference number, also known as a UTR. This is the number you will need to use to be able to file your taxes. The sooner you do this, the more lenient HMRC will be if penalties occur. Being penalized or fiend will only happen if you miss any payment deadlines.
If you fail to file your taxes, or you fail to pay them on time, you will be penalized. Not only this but interest will be applied for every missed day of payment.
Essentially, this means that if you don’t pay the money you owe, they will charge you more on top of that and then again on top of that if you still do not pay. For every late filed return, you get an automatic fine of £100.
If you still have not paid it three months later, a charge is applied every day until you do. This is a charge of £10. If your payment is still overdue after six months, then a fine of £300 is added on top of this – or 5% of however much tax is owed (this is calculated based on what amount is higher).
After 12 months, the same thing happens again. You will save yourself a lot of money and inconvenience if you just pay the tax when you need to.