Google will now start deducting US taxes from the YouTube earnings generated from the audience in the US, from a creator located outside the US, starting from June 2021.
YouTube creators will be required to submit relevant tax info in AdSense by May 31, 2021, and Google will determine the amount of taxes to be deducted. Up to 24% of a creator’s total worldwide YouTube earnings can be deducted.
If tax forms are not provided, the tax rate will default to 24% of your total earnings for individual account types. Terms Of Service for creators outside the US will be also be updated with the latest updates, outlining where earnings from YouTube will be considered royalties from a US tax perspective.
The parent company mentions, “Google has a responsibility under Chapter 3 of the US Internal Revenue Code to collect tax info from all monetizing creators outside of the US and withhold taxes in certain instances when they earn income from viewers in the US”.
The tax deductions are basically dependent on three major factors (and several others):
- Revenue generated from the audience in the US
- Whether the country located in has a tax treaty with the United States
- Whether the creator submits relevant tax info or not
Google outlined the possible scenarios with an example of a creator located in India earns a total of $1,000 in revenue from YouTube in a month and generates $100 from US viewers.
Creator doesn’t submit tax info: Final deduction is $240 because the withholding tax rate if they don’t submit a form, is up to 24% of total earnings.
This means that until Google has your completed tax info, they will deduct up to 24% of the total earnings worldwide, and not just the US earnings.
Creator submits tax info and claims a treaty benefit: Final tax deduction is $15. This is because India and the US have a tax treaty relationship that reduces the tax rate to 15% of earnings from viewers in the US
Creator submits tax info but is not eligible for a tax treaty: Final tax deduction is $30. This is because the tax rate without a tax treaty is 30% of earnings from viewers in the US
How To Submit relevant Tax Info
- Sign in to your AdSense account
- Click Payments
- Click Manage settings
- Scroll to “Payments profile” and click edit Edit next to “United States tax info”
- Click Manage tax information
- On this page, you’ll find a guide that will help you to select the appropriate form for your tax situation
Creators will also be able to make edits in case of movements from locations originally mentioned in the info. If creators have changed their address, they need to make sure the updated permanent address is the same in both sections: “Permanent residence address” and “Legal address”.
Creators looking for more information on the subject can go through this support article that includes frequently asked questions on this topic.