If you are a YouTube creator, you may have to pay $24 as tax for every $100 you make

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If you are a YouTube creator, you may have to pay $24 as tax for every $100 you make
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  • YouTube will begin deducting US taxes from payments to creators as early as June 2021 from creators outside of the US.
  • The move will impact the earnings of the YouTube creators' community in India and other countries too.
  • There are more than 1700 Indian YouTube channels with more than 1 million subscribers as per the latest data.
  • If a creator doesn't submit tax info by May 31, they may have to pay up to 24% of their total earnings.
  • However, for those that will submit the tax info by May 31, the rate will be 15% of the earnings from viewers in the US.
In a daunting news for the Youtube creators in India and outside US, the search engine giant Google said that it would begin deducting US taxes from payments to creators as early as June 2021 from creators outside of the US.

Earnings from viewers in the US through ad views, YouTube Premium, Super Chat, Super Stickers, and Channel Memberships will be taxable.

Google said it would soon be updating its terms of service for creators outside of the US, where your earnings from YouTube will be considered royalties from a US tax perspective. Adding that they had already made this change to US creators' terms of service in November last year.

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"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 31st, 2021, Google may be required to deduct up to 24% of your total earnings worldwide," Google said in an email to creators. Google AdSense program allows a faster and easier way to display relevant Google ads on your result pages

The move will impact the earnings of the YouTube creators' community in India and other countries too. There are more than 1700 Indian YouTube channels with more than 1 million subscribers as per the latest data.

What is the creators' community required to do now?

The streaming giant YouTube has asked creators to submit their tax information to AdSense to understand the correct amount of tax deductions.
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To explain further, the company gave an example that if a creator in India earns $1,000 in revenue from YouTube in a month. Of the $1000 in total revenue, their channel generated $100 from US viewers.

Then these are the possible withholding 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 Google has your completed tax info, Google will deduct up to 24% of your total earnings worldwide - not just your US earnings.
  • Creator submits tax info and claims a treaty benefit: Final tax deduction is $15. This is because India and the US have a tax treaty relationship that reduces the tax rate to 15% of earnings from viewers in the US
  • Creator submits tax info but is not eligible for a tax treaty: For creators falling in this category the final tax deduction will be $30. As the tax rate without a tax treaty is 30% of earnings from viewers in the US.
Once Google begins withholding taxes, the creators will see the finalised amount withheld in their regular AdSense Payments Transactions Report.

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