This is the United States income tax guide for OnlyFans creators earning income. We also have a Canadian income tax guide.
Disclosure: This is not official tax advice. Always perform your own research and consult with a CPA/tax expert with respect to the complexities of your unique situation.
Do OnlyFans creators have to pay taxes?
Yes. OnlyFans creators have to pay taxes on all income associated with being a creator. Income attributable to an OnlyFans business may include subscription revenues, pay-per-view sales, and tips.
Does OnlyFans provide W2s?
No, OnlyFans does not provide W2s. Your earnings on OnlyFans are considered business income. OnlyFans is not considered your employer and is therefore not required to provide you a W2 form.
OnlyFans will provide you with a 1099-NEC if they’ve paid you over $600 in the calendar year. You can download this completed form from your OnlyFans account. Ensure that you save this tax form for tax preparation as the IRS will also have a copy and will expect you to report this income on your tax return!
Is being an OnlyFans creator considered a business?
Yes. As an OnlyFans creator, you are deemed to be carrying on a business in the eyes of the Internal Revenue Service (IRS). Therefore, you must report all earnings associated with your OnlyFans business as gross business income. You are then entitled to various deductions to bring down your overall net income for business purposes.
Most creators are deemed to be a sole proprietor unless they otherwise incorporate or set up a different legal structure for their business. As a sole proprietor, you would generally be deemed to earn self-employment income. Self-employment income is taxed under U.S. tax law similar to employment income. However, a sole proprietor may claim deductions for business expenses, generally not available to employees.
SEE ALSO: Setting Up YouTube Business Legal Structure
Completing Form W-9
When you become a creator on OnlyFans, you will need to complete Form W-9, which provides OnlyFans the information necessary to pay you and provide tax documents at year end. As a sole proprietor, you would fill this form out as yourself in your personal capacity. Your social security number (SSN) will serve as your identification – you do not need to obtain an employer identification number (EIN) as a sole proprietor.
SEE ALSO: How to Fill Out Form W-9 for OnlyFans
OnlyFans does not withhold U.S. federal income tax on payments – meaning you will receive 100% of your earnings deposited into your bank account with no reduction for tax withholdings, which is the opposite of what happens when you are paid by an employer, who withholds a percentage of your earnings each paycheque. If you have earned and withdrawn more than $600 from OnlyFans in a calendar year, OnlyFans will issue you a Form 1099-NEC before the end of January of the following calendar year.
Form 1099-NEC confirms to you the total amount of income you’ve received from OnlyFans, and is also sent to the IRS to allow them to validate your reported income when filing your income tax return. Even if you have not received this form due to earning less than $600, you are still required to report ALL of your earnings.
Common Business Expenses and Deductions
Since being an OnlyFans creator is akin to running a business, you are entitled to expenses and deductions incurred in the course of carrying out your OnlyFans business.
To be deductible, a business expense must be both ordinary and necessary. An ordinary expense is one that is common and accepted in your trade or business. A necessary expense is one that is helpful and appropriate for your trade or business. An expense does not have to be indispensable to be considered necessary.The Internal Revenue Service
Listed below are some common business expenses that an OnlyFans creator may incur during the course of their business.
- Business use of home: if you film inside your home, have a dedicated studio space, and/or use your home as a workspace to edit and upload your videos, you can claim a portion of all of the expenses that contribute to maintaining your house – including property taxes, heat, electricity, insurance, maintenance, and mortgage interest
- Office expenses: any expenses incurred in the course of maintaining the business-side of your OnlyFans are deductible – including pens, printer paper, and toner
- Internet: the costs you pay to your internet service provider (ISP) are deductible at the percentage used for your OnlyFans business
- Cell phone: your cell phone bill is also deductible at the percentage used for your OnlyFans business
- Professional fees: any fees associated with experts you’ve hired in the course of your OnlyFans business, either for consulting to help you get started or for a CPA you’ve hired to help with your taxes, are deductible
- Data storage & subscriptions: purchases of external hard drives or cloud storage subscriptions are deductible when used for the purpose of storing video footage; additionally, any ongoing subscriptions relevant to your OnlyFans channel, such as royalty-free music licensing services, are deductible
- Software: the purchase of professional video editing software used for OnlyFans may be completely deductible
- Costumes: purchases of costumes used exclusively for your OnlyFans content may be fully deductible
- Bank account and credit card fees: if you have to pay fees for your business bank account or business credit card, these may be fully deductible, as long as they are used 100% for business purchases
- Makeup and beauty products: products used exclusively for preparing yourself for your OnlyFans content may be fully deductible
Some costs must be capitalized, rather than deducted immediately in full. Capitalized costs are deducted from income over time through depreciation or amortization. Things like equipment, furniture, and trademarks are considered capital in nature.
These items will be deducted over a period of time, for example, a new DSLR camera purchase can be deducted at 20% of its original cost for a period of 5 years. The rates and time horizon vary by type of capital expense, so it is important to consult a tax professional on these items.
As a sole proprietor, you’re more likely to be subject to an audit, so it’s imperative that you maintain appropriate documents and records (ie. receipts, invoices, contracts) to ensure that you have sufficient proof to substantiate expenses claimed as a deduction for tax purposes. Consider maintaining digital copies of documents and store them in the cloud.
Tax Filing Requirements
You may be familiar with Form 1040, U.S. Individual Income Tax Return. However, as a business owner, you also need to file Schedule C, Profit or Loss from Business (Sole Proprietorship), in which you would report all of your OnlyFans income and related deductions.
The deadline for filing your Schedule C with Form 1040 is typically April 15. Extensions are available and can be filed, but you should consult with a professional before doing so.
If you owe business taxes, the deadline for paying these taxes is typically March 15.
There are penalties associated with non-payment and insufficient tax payments – so keep on top of deadlines to avoid having to payout additional amounts to the IRS.
Tax Best Practices
- Find a reputable tax accountant and work with them throughout the year to ensure you meet your filing obligations and are prepared come tax season.
- Use an accounting software or find a bookkeeper (virtual bookkeepers are becoming more common) to help you keep your finances in order all year long. This reduces the burden of needing to compile and calculate all of your expenses during tax season.
- Open a separate bank account where income payments are deposited and funds for expenses will be drawn from. This ensures a hard line is drawn between personal and business activities and increases the odds of a favorable audit.
- Calculate your tax bracket based on your estimated annual income. Open a separate bank account (ex. high yield interest savings) and ensure you are putting away a percentage of your earnings each time you are paid, based on your tax rate. The worst position to be in would be finding out in March that you owe taxes and haven’t put away enough to cover the payment.
- Take advantage of technology – use your phone to scan and create copies of all expense documentation.