Several elements made OnlyFans a hit among online models, influencers, or individuals who want to profit from their beauty and charisma by providing fans with exclusive intimate content. While producing and uploading content to OnlyFans can be a hobby for some people, it is vital to consider the tax consequences involved.
Do you pay taxes on OnlyFans income? Read on to discover.
Do You Pay Taxes on OnlyFans Income? – The Verdict
All income produced on OnlyFans is subject to the same taxes as a standard job, which includes tips given by fans. When you post content on OnlyFans to receive money in exchange, the proceeds are not considered a wage or salary.
Hence, individuals generating income on OnlyFans must pay income and self-employment taxes. Independent content creators on OnlyFans are treated as small business owners by the Internal Revenue Service (IRS).
The self-employment tax rate is 15.3% on the income generated through the platform. Once the content creator starts earning more than $400 per year on OnlyFans, the IRS will charge this flat rate.
Fortunately, only the content producer’s net business income is subject to self-employment tax, not the gross income.
Net Income vs. Gross Income – OnlyFans Self-Employment Tax
Producing content for the exclusive public on OnlyFans requires a fair share of investment. The net business income refers to the earnings of an independent producer after subtracting the eligible tax write-offs.
Several of the expenses involved in the process to record, editing, and upload the content to the adult platform are deductible from the taxes owed to the IRS. Accordingly, it is possible to deduct a significant percentage of income from taxes.
This way, you can lower the taxable income, self-employment taxes, and income taxes altogether.
OnlyFans Income Write-Offs – An Overview
The first rule to identify a potential write-off on OnlyFans income is to determine which expenses meet the IRS standard. The federal agency has two basic rules that every deduction must meet to qualify – the expense must be “ordinary” and “necessary.”
An “ordinary” expense refers to a normal or expected cost in the process of production, while a “necessary” expense refers to a not necessarily indispensable but helpful and appropriate cost for the adequate functioning of the business.
OnlyFans content producers cannot write off expenses that are not connected to their businesses, as they must necessarily have a work-related purpose. The basic deductible expenses include equipment used for recording, editing, and fine-tuning the content, such as:
- Cell phone
- Filming equipment
- Sound equipment
- Lighting
- Editing services
- Computer
- Staging expenses
- Professional photoshoots
Other elementary deductions available for OnlyFans content producers include name registration fees (intellectual property protection), contractor payments, commissions, OnlyFans platform fees, home office deductions, and supplies.
The vast majority of content producers on OnlyFans earn 80% or more of their income through their A-tier client list, which results in a growing demand for more provocative content. Many fans have specific requests, leading to additional operational costs with items like:
- Costumes
- Adult toys
- Props
- Wigs
- Travel
- Temporary tattoos
In such cases, it is possible to deduct expenses associated with “on-demand” content. As expected, it is crucial to document all expenses and keep receipts to claim these deductions and ensure full tax compliance with IRS.
Do You Want to Save Tax Money on OnlyFans Income? – Immediately Consult an Expert CPA
Waste no time with uncertainty. Call Edward D. Quilca, CPA today at (786) 310-5582 or email [email protected] to find an ideal tax-saving strategy for your case.
