YouTube creators from countries outside the US will soon have taxes withheld from their revenue. In the coming months, creators will have the United States federal income tax deducted from generated revenue by US-based users.
International creators will be taxed based on their individual circumstances. To this end, YouTube has asked creators to send in their tax information by the end of May. This will enable the Google-owned streaming company to determine how much tax to withhold. Creators that failed to send in their tax information by that date will have 24 percent deducted from worldwide earnings and not just US.
“We’re a little over a month away from the May 31st deadline to submit your tax info. Completing the tax info helps us determine the applicable tax rate on your U.S. earnings, otherwise the default rate of up to 24% of your total earnings worldwide could apply,” YouTube wrote.
The 24 percent deduction represents the standard amount of federal tax that self-employed people must pay. Another reason for the 24 percent deduction is that if YouTube does not have a creator’s tax information, it does not know where they file taxes; and there is a possibility that they would file in the US, which means they would need to pay 24 percent on all earnings, and not just US revenue.
Creators who do not live in countries that have tax treaties with the US, will also have their US based revenue taxed at 24 percent. What that means is that 24 percent will be used as the default percentage for all such deduction if the case applies to you.
The reverse is of course the case should you submit your tax information and live with US tax countries—this means you will be charged at lower rates. In the case of a creator from India for example, YouTube will deduct and withhold $15 being tax from a $100 generated revenue. This is since India has a tax treaty with the US.
For creators who reside in the US, the new code does not affect their income as it does not apply to them. “For creators outside of the U.S., we will soon be updating our Terms of Service where your earnings from YouTube will be considered royalties from a U.S. tax perspective.”