Individuals and businesses must pay income tax. This includes self-employed creators, such as authors, artists, musicians, and streamers. Streamers generate revenue through subscriptions, donations, and sponsorships. These gaming professionals may supplement their primary income with modest profits from streaming, or streaming may be their primary income source. Let’s look at steps streamers can take to manage their revenue and pay taxes on their income.
Identify expenses you can deduct.
The Internal Revenue Service (IRS) provides information about tax-deductible purchases. You can deduct the cost of equipment needed for streaming, enabling you to reduce your tax burden. Streamers need plenty of equipment, including gaming computers, video games, webcams, and suitable lighting. Your lighting set will affect your appearance on streams. Your lighting also reduces eye strain, enabling you to stream for more extended periods without developing headaches or other symptoms.
When making purchases, refer to experts to ensure you invest in the best equipment for your needs. Before purchasing lighting set for streaming, compare lighting sets for streamers. Some excellent lighting options include the Neewer 700W Professional Softbox Kit, Mountdog Softbox Lighting Kit, NEEWER Ring Light, Fovitec Softbox Continuous Lighting Kit, and AceTaken’s Webcam Ring Light. Your gaming setup may affect your options because you may not have space for multiple light stands in your gaming area. While filming experts may use a key light, soft light, and fill light in their setup, some people use a ring light instead of fill light and soft light.
In addition to deducting business purchases, you can deduct fees related to your streaming activities. A portion of your internet costs and other home office expenses, such as utility bills and insurance fees, may be valid deductions. You might be able to deduct subscriptions to other streaming platforms if they’re essential for your business.
Organize your tax documents.
Once you’ve identified the expenses you can claim, develop a system for tracking your expenses. You can use envelopes and tax folders to store receipts, credit card statements, and other relevant documents you’ll need when it’s time to file. You’ll benefit from using tax presentation folders if you’re filing your taxes yourself because you can label the folders, making it easy to identify the contents.
Custom folders can be helpful if an accountant’s preparing your tax return. The folders have business card slits, making it easy to include your business card with your tax information. Pocket folders make it easier for tax preparers to find relevant data because different materials can be sorted into the pockets.
Prepare, file, and pay your taxes.
Tax accounting courses outline the key steps to take when preparing your tax returns. You’ll benefit from taking a tax accounting course if you plan to file your taxes because you’ll understand each step in the filing process and familiarize yourself with applicable tax deductions. Use a tax return envelope that identifies the contents, ensuring your tax filing isn’t misdirected.
You may opt to hire a tax accountant to prepare your annual filing. Look for a tax preparer with experience who uses expert accounting software and tax materials, such as tax folders. This way, you’ll have all the information together, including your tax preparer’s contact information and a copy of your filed return. Receiving these documents in tax folders makes it easy to keep track of your filings. Keep a percentage of your streaming revenue in a separate bank account to ensure you have the funds needed to pay your taxes. Pay your tax bill with a check when you mail your return.
Identifying deductible expenses and using tax resources to keep track of your receipts makes it easier to prepare and file your taxes. Take a tax preparation course or hire a tax preparer to complete your return and send a check for your taxes with your annual filing.
