Google has made an announcement that is not great news for YouTube content creators outside the US. Essentially, it is going to make YouTubers poorer.
Google has informed YouTubers via an email that it will be “required to deduct US taxes from payments to creators outside of the US”. YouTubers in America will not have to take on any additional tax burden though. And this additional tax that is going to be levied on YouTubers outside the US is going to kick off as early as June 2021.
“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,” said Google in the email.
What’s important to understand here is the fact that tax will be deducted from the earnings from US viewers through ad views, YouTube Premium, Super Stickers, Super Chat and Channel Memberships. You do not have to pay any tax for the money you (YouTubers) are making from viewers outside the US as long as you provide relevant tax documentation.
How much tax will you end up paying?
If you choose to ignore this and do not submit documents as necessary, you will have to pay 24% tax on your entire monthly earnings from YouTube from all users.
If you submit tax information and are eligible for treaty benefits, you will have to pay 15% tax on the money you make from viewers in the US.
If you are not eligible for the treaty benefits, you will have to pay 30% on the money you make from US viewers.
If you don’t submit your documents:
You will end up paying $240 out of the $1000 you are making from YouTube thanks to the 24% tax deduction. Since you did not submit tax documents, the deduction is going to be from your entire earnings, not just earnings from US viewers.
If you submit documents and are eligible for treaty benefit:
You will end up paying $15 out of the $100 you are making from US viewers (15% tax deduction). Indian and US have a tax treaty relationship that reduces the tax rate to 15%.
If you submit documents and are not eligible for treaty benefit:
You will end up paying $30 out of the $100 you are making from US viewers (30% tax deduction).
So, if you are making money from YouTube, it is best to head over to the Google support page and check the tax information and documentation you need to submit.
The last date to submit all this is May 31, 2021.