The Ultimate Guide To Filing Your OnlyFans 1099 Taxes

11 Min Read

Scope of Work

Taxes

Contractor

Tom Smery

Tom Smery is a certified CPA for over a decade. In his free time, he writes articles to pass on his expert knowledge on taxes and accounting. Thomas has a wide range of deep knowledge on 1099 taxes, and finance topics. You can find him fishing when he is not preparing taxes for his clients or writing about accounting.

OnlyFans has become one of the biggest social media platforms in recent years. It has become a lucrative place for content creators to earn a good amount of money. If you are an OnlyFans girl or guy earning income through the content subscription service, then you'll need to file your independent contractor taxes at the end of the year.

An OnlyFans content creator is considered self-employed. So, this means they are required to pay certain taxes and are eligible for tax deductions. In this guide, we'll go over tips you need to know so you can file your OnlyFans 1099 taxes as smoothly as possible. Let's start off with the tax forms you'll receive as a content creator.

Note: If you want an app to scan your bank/credit card receipts, track your OnlyFans expenses, estimate your taxes and send you filing deadline reminders, try Bonsai Tax. Our software automatically records your business-related expenses and saves you a ton of money during tax time. In fact, users typically save $5,600 from their tax bill at the end of the year (that's a lot of money to leave on the table). Claim your 14-day free trial here.

1099s You'll Receive As An OnlyFans Content Creator

A self-employed content creator on the platform, you will receive a 1099 information return from OnlyFans or a third-party payment processor if you meet certain requirements. Let's review some of the common 1099 forms you'll deal with as a self-employed OnlyFans content creator.

IRS 1099-NEC

A business has to send you a 1099-NEC if they paid you more than $600. Because of the low reporting threshold, the 1099-NEC is the most common tax form sent out to freelancers. OnlyFans will send you a 1099-NEC if you earned more than $600 by using their platform. If you made less than $600 from the app, then you most likely will not receive a tax form. However, you are still responsible for reporting your income earned and paying taxes on them before the due date.

OnlyFans will mail out the forms by January 31st, as required by law. The company will also send a copy of the 1099 form to the IRS. So, the IRS will know if you did not pay taxes on your earnings. If you didn't receive a 1099 form in the mail and you know you should have received a form, verify the address in you OnlyFans account. OnlyFans could have sent the tax form to the wrong address.

If you met the requirements to receive a 1099-NEC, you can log into your OnlyFans account and download the tax form.

If you need help with filling out your tax return, read our step-by-step guide to filing your 1099-NEC.

1099-K

If you accept payments via PayPal for content outside of the platform, you may receive a 1099-K. the requirements to receive a 1099-K are if you processed at least $20,000 worth of payments and at least 200 transactions for you in the previous year.

OnlyFans will not send you the 1099-K, however, you'll receive the tax form from the third-party payment processor.

Depending on what State you live in, you may receive a 1099-K instead of a 1099-NEC i.e. if you live in Massachusetts or Vermont and have over $600 in gross payments, then you will file a 1099-K.

New Laws In 2022

The U.S. President, Joe Biden, passed a new law requiring a lower threshold to receive a 1099-K from third-party payment processors. Instead of $20,000 in payments, the minimum threshold will be changed to $600. This is to catch folks who are avoiding taxes.

Reporting All Of Your Taxable Income

If you earn income outside of the OnlyFans platform, the IRS still views the income as taxable income. It doesn't matter if you are earning money through a single OnlyFans account, a WebChat service, or a premium Snapchat account, you are required to report all your gross income from all sources.

If you are receiving a 1099, that means no one is withholding taxes from you. An employee, for example, will have part of their wages withheld to pay Social Security and Medicare taxes. OnlyFans influencers on the other hand, pay taxes on their own.

Paying Self-Employment Tax On Your Earnings

First, as a self-employed business owner, you'll be responsible for paying Federal and State income taxes. Depending on what State your tax ID is in, you'll pay income tax anywhere from 0% to 10.75% on your earnings. In regards to your Federal taxes, the rate can range from 10% to 37% depending on how much you make. Unlike self-employment tax, the amount of money you'll owe will depend on how much money you earn throughout the year.

You'll also need to pay FICA or Federal Insurance Contributions Act taxes as well. FICA taxes are comprised of Social Security (12.4%) and Medicare Taxes (2.9%) or self-employment tax on the income you earn. In other words, you'll need to pay 15.3% in self-employment taxes. OnlyFans does not withhold taxes from your income unlike if you were an employee.

If you worked in more than one State throughout the year, you'll almost certainly need to submit tax forms for all of the States where you made money, as well as all of the States where you lived while working.

Use our free tool to calculate your 1099 taxes.

Each time you receive a payment, you'll want to set aside money for self-employment taxes. This will help you make your estimated quarterly tax payments.

When You Do Not Need To Pay Self-Employment Taxes

The IRS states that you do not need to pay Social Security and Medicare taxes if you made less than $400 in self-employment income. You may be off the hook for self-employment tax, but you still need to claim the earnings on your income tax. You won't owe self-employment taxes if your OnlyFans profile is only used as a hobby and not a business.

Circumstances For A Hobby Versus a Business

OnlyFans hobbyists don't have to pay self-employment taxes. The IRS has clear guidelines on what is considered a hobby versus business. To determine if your OnlyFans content creation is a hobby or a business, ask yourself these questions (and honestly answer them).

Are your records up to date?
Are you knowledgeable enough about the subject to turn it into a business?
Is it your intention to make money, and do your time and effort reflect that?
Do you change your business model to make it more profitable?
Do you rely on the activity's income to make ends meet?
Have you ever made money doing something similar before i.e. other social media ventures?
Are your losses a typical part of the starting process, or are they the result of events beyond your control?
Was the previous profit steady, or did some years see greater activity than others?
Do you think you'll be able to generate money from this hobby in the future?

If you answered yes to any of these questions, your OnlyFans account may be considered a business. If you answered "no" to all of these questions, you may be running your account as a hobby but you still need to pay income tax. Fill out a Form 1040 and file it in the taxable earnings section.

If you determine you are a hobbyist, you cannot claim any business expenses for deductions as they will be considered personal expenses.

You'll Need To Pay Quarterly Taxes...

Since the U.S. operates on a "pay-as-you-go" tax system, you'll need to make payments to the IRS throughout the year. Quarterly taxes were designed to help freelancers from paying one large bill at the end of the year or tax time.

You can calculate how much you'll need to send to the IRS by taking your total tax liability from the previous year (like self-employment, income, and other taxes) and dividing that number by four.

Let's review the dates when quarterly payments are due.

Quarterly Tax Deadlines

The deadlines to pay taxes quarterly are:

April 15
June 15
September 15
January 15 of the following year

You can send payments directly to the IRS via Direct Pay or use Form 1040-ES to figure and pay estimated taxes.

For a more comprehensive guide to making payments, check out our article on how to send quarterly taxes.

If You Miss The Deadline...

Let's talk about if completely forgot to send in the estimated tax payment and if you sent in less than you should.

First, the IRS is not so forgiving if you miss a due date and you may be fined with a penalty rate. For making a quarterly tax payment late, you could be fined upwards of 0.5% of your balance due for each month (or part of a month).

So, if you missed a deadline, you'll want to send in your payment as soon as possible as the penalty will accumulate.

Now, let's talk about if you send in less than you owe.

Sending In Less Than You Owe...

If you calculate your payment incorrectly and you send in less than you owe, you could pay an underpayment penalty. In 2021, the underpayment penalty is 3% percent for freelancers. In order to avoid this penalty, you'll need to have paid at least 90% of the previous year's tax liability.

Self-Employed Tax Deductions You Qualify For

As an OnlyFans content creator, you'll want to ask yourself what things you purchased or other expenses to help you create content. This will be reported on Schedule C or profits and losses statement. The Schedule C will be included on your Form 1040 tax return. You will need to pay self-employment tax and income tax on the net income reported on your Schedule C.

You will be able to deduct business expenses from your earnings and only pay taxes on the remaining amount.

Cell phone bill - you can deduct the business-related portion of your cell phone bill from your tax bill i.e. if you only use your cell phone 25% of the time for business, you can deduct 25% of the costs as a tax write-off.
Camera and equipment - if you purchased a nice camera to shoot your OnlyFans content, then it is tax-deductible. Equipment such as lighting, tripod or a separate computer fall into this category
Content accessories - I'm not going to go into too much detail here, but if you used any accessories for content/photoshoots/videos, they are deductible. It has to be purchased for non-personal use and primarily for business or creating content.
Home office deduction - as a self-employed content creator, you can deduct a portion of your home from your taxes. For example, an area of your home dedicated to making videos or doing photoshoots can be deducted. Remember, if you claim a home office deduction, the portion of your home has to be a "principal place of business" and where you exclusively use for business-related activities. A portion of your rent can also be written off. A part of your utility bill can also be claimed.
Internet or Wifi - As an online content creator, you need the internet to work. You can deduct a portion of your internet bill from your taxes.
Clothes - clothes you purchased to create content are deductible as well. Fare warning, the clothes cannot be used for "everyday wear". You cannot deduct clothes such as jeans which you could wear to a supermarket or mall.
Mileage - Keep track of your miles for the times you drove for business purposes. The standard mileage deduction requires only that you maintain a log of qualifying mileage driven. For 2021, the rate is 56 cents per mile.
Hotels/AirBNBs - If you rented a hotel or luxury AirBNB for a night for a photo shoot, then these expenses are deductible.
Software - if you paid for various software like editing or tax apps to help you run your business, you are eligible to deduct the money spent from your taxes
Stage Make-up and beauty supplies - Any beauty accessories you use specifically for a photo or video shoot is tax deductible.
Earned income credit and additional child tax credit - this isn't necessarily a deduction, but you can offset income tax and self-employment tax by claiming this tax refund. Learn more here.

Note: if you want a software to automatically scan your bank/credit card statements and keep track of your expenses for your tax return, try Bonsai Tax. Our app literally records potential write-offs to save money at the push of a button. Sign up for a 14-day free trial here.

Organizing Your Tax Receipts

There are a few ways you can organize your tax receipts. The IRS has kept up with the times and allows for digital receipts as proof of your tax deductible expenses. Another method is to manually track your receipts or have a business bank account/credit card specifically designated for your OnlyFans deductions.

Online storage of your receipts with a software is recommended so you don't lose your records in case the IRS audits you.

It's Time To File Your OnlyFans Taxes!

There you have it. Everything you need to know to file your OnlyFans tax return. Remember to mark your calendars for quarterly taxes as well as set money aside throughout the year to pay your estimated, Social Security and Medicare taxes. You don't want a surprise penalty at the end of the tax year.

We hope this guide has made filing 1099 taxes for creators a breeze. Remember to check out our online software, Bonsai Tax to help you file your OnlyFans tax return and save a ton of money. Try a 14-day free trial today.

If you have any questions, we always recommend you consult with an accountant or expert tax preparer at the end of the tax year.

What Defines a Verbal Contract?

A verbal contract (formally called an oral contract) refers to an agreement between two parties that's made —you guessed it— verbally.

Formal contracts, like those between an employee and an employer, are typically written down. However, some professional transactions take place based on verbally agreed terms.

Freelancers are a good example of this. Often, freelancers will take on projects having agreed on the terms and payment via the phone, or an email. Unfortunately, sometimes clients don't pull through on their agreements, and hardworking freelancers can find themselves out of pocket and wondering whether a legal battle is worth all the hassle.

The main differences between written and oral contracts are that the former is signed and documented, whereas the latter is solely attributed to verbal communication.

Verbal contracts are a bit of a gray area for most people unfamiliar with contract law —which is most of us, right?— due to the fact that there's no physical evidence to support the claims made by the implemented parties.

When is a Verbal Agreement Legally Binding?

For any contract (written or verbal) to be binding, there are four major elements which need to be in place. The crucial elements of a contract are as follows:

Offer and acceptance: An offer is made and accepted by another party involved in the agreement;
Consideration: The involved parties must exchange something of value (money, a service, time, etc), this is known as consideration;
Intention and certainty: All parties must fully understand the terms of the contract and intend to make a legally binding agreement freely; and
Capacity: The parties must have the capacity to legally enter into the contract; they're above age and of a stable mindset.

Therefore, an oral agreement has legal validity if all of these elements are present. However, verbal contracts can be difficult to enforce in a court of law. In the next section, we take a look at how oral agreements hold up in court.

How strong is a verbal agreement in court?

Most business professionals are wary of entering into contracts orally because they can difficult to enforce in the face of the law.

If an oral contract is brought in front of a court of law, there is increased risk of one party (or both!) lying about the initial terms of the agreement. This is problematic for the court, as there's no unbiased way to conclude the case; often, this will result in the case being disregarded. Moreover, it can be difficult to outline contract defects if it's not in writing.

That being said, there are plenty of situations where enforceable contracts do not need to be written or spoken, they're simply implied. For instance, when you buy milk from a store, you give something in exchange for something else and enter into an implied contract, in this case - money is exchanged for goods.

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When are verbal agreements not enforceable?

There are some types of contracts which must be in writing.

The Statute of Frauds is a legal statute which states that certain kinds of contracts must be executed in writing and signed by the parties involved. The Statute of Frauds has been adopted in almost all U.S states, and requires a written contract for the following purposes:

The sale of real estate or vehicles
Real estate leases lasting longer than one year.
Property transfer following the death of the owner.
The case of a party agreeing to pay debt for someone else.
Any contract that requires more than a year to fulfil.
A contract involving and exceeding a specified amount of money (which varies by state).

Typically, a court of law won't enforce an oral agreement in any of these circumstances under the statute. Instead, a written document is required to make the contract enforceable.

Contract law is generally doesn't favor contracts agreed upon verbally. A verbal agreement is difficult to prove, and can be used by those intent on committing fraud. For that reason, it's always best to put any agreements in writing and ensure all parties have fully understood and consented to signing.

How are Verbal Contracts Enforced?

Verbal agreements can be proven with actions in the absence of physical documentation. Any oral promise to provide the sale of goods or perform a service that you agreed to counts as a valid contract. So, when facing a court of law, what evidence can you provide to enforce a verbal agreement?

How can you prove an oral contract?

Unfortunately, without solid proof, it may be difficult to convince a court of the legality of an oral contract. Without witnesses to testify to the oral agreement taking place or other forms of evidence, oral contracts won't stand up in court. Instead, it becomes a matter of "he-said-she-said" - which legal professionals definitely don't have time for!

If you were to enter into a verbal contract, it's recommended to follow up with an email or a letter confirming the offer, the terms of the agreement , and payment conditions. The more you can document the elements of a contract, the better your chances of legally enforcing a oral contract.

Another option is to make a recording of the conversation where the agreement is verbalized. This can be used to support your claims in the absence of a written agreement. However, it's always best to gain the permission of the other involved parties before hitting record.

Written vs Verbal Contracts: What's the Verdict?

Fundamentally, most verbal agreements are legally valid as long as they meet all the requirements for a contract. However, if you were to go to court over one party not fulfilling the terms of the contract, proving that the interaction took place can be extremely taxing.

So, ultimately, the question is: written or verbal agreements?

Any good lawyer, contract law firm, or legal professional would advise you to make sure you formalize any professional agreement with a written agreement. Written contracts provide a secure testament to the conditions that were agreed and signed by the two parties involved. If it comes to it, a physical contract is much easier to eviden in legal circumstances.

Freelancers, in particular, should be aware of the extra security that digital contracts may provide. Many people choose to stick to executing contracts verbally because they're not sure how to write a contract, or they think writing out the contract terms is too complicated or requires expensive legal advice. However, this is no longer the case.

"@bonsaiinc is probably my all time favorite freelance tool. hands down. the team is super responsive and accessible when i have questions."

David Urbinati

Motion design / animation

Say hello to digital contracts

Today, we have a world of resources available at our fingertips. The internet is a treasure trove of invaluable information, platforms, and software that simplifies our lives. Creating, signing, and sending contracts has never been easier. What's more, you don't have to rely on a hiring a lawyer to explain all that legal jargon anymore.

There are plenty of tools available online for freelancers to use for guidance when drafting digital contracts. Tools like Bonsai provide a range of customizable, vetted contract templates for all kinds of freelance professionals. No matter what industry you're operating in, Bonsai has a professional template to offer.

Benefits of written contracts

A written contract makes the agreement much easier to prove the terms of the agreement in case something were to go awry. The two parties involved can rest assured that they're legal rights are protected, and the terms of the contract are sufficiently documented. Plus, it provides both parties with peace of mind to focus on the tasks at hand.

Create Professional Contracts with Bonsai

Bonsai's product suite for freelancers allows users to make contracts from scratch, or using professional templates, and sign them using an online signature maker.

With Bonsai, you can streamline and automate all of the boring back-office tasks that come with being a freelancer. From creating proposals that clients can't say no to, to sealing the deal with a professional contract - Bonsai will revolutionize the way you do business as a freelancer.

Why not secure your business today and sign up for a free trial?