[US] IRS flags content creators skipping quarterly tax payments

In the US, the Internal Revenue Service (IRS) classifies anyone earning income from online content as self-employed from the very first dollar. This applies across platforms and formats from video content and podcasts to subscriptions, sponsorships, and affiliate activity, AOL reports.

Unlike traditional employees, such individuals are responsible for managing their own tax obligations, including setting aside and paying taxes throughout the year.

Self-employed individuals must pay both federal income tax and self-employment tax, which covers Social Security and Medicare contributions. Combined, this amounts to a 15.3 per cent tax on net earnings, reflecting both the employer and employee portions typically split in standard payroll arrangements.

Another important consideration is the requirement to make quarterly estimated tax payments. If an individual expects to owe $1,000 or more in federal tax for the year, the IRS reportedly requires payments to be made throughout the year rather than in a single annual settlement. These payments are generally due in April, June, September, and January.

Failure to meet these deadlines can result in underpayment penalties and interest charges. In early 2026, the IRS applied an interest rate of 7 per cent on underpaid tax, calculated daily, before reducing it to 6 per cent later in the year. Even where a taxpayer ultimately receives a refund, missed or insufficient quarterly payments may still trigger penalties.

There are, however, “safe harbour” thresholds that can help individuals avoid penalties. These include owing less than $1,000 in total tax, paying at least 90 per cent of the current year’s liability, or matching (or exceeding, for higher earners) the previous year’s tax paid.

The scope of taxable income is broad. It extends beyond direct payments from platforms or brands and includes a wide range of revenue streams such as advertising income, sponsorships, subscriptions, merchandise sales, affiliate commissions, and audience donations or tips.

Non-cash compensation must also be considered. Goods or services received in exchange for promotional activity, such as gifted products or experiences, may be taxable based on their fair market value.

For payroll and HR teams, particularly those supporting flexible or non-traditional workforces, these rules reportedly highlight the growing overlap between employment and self-employment models. Understanding how these income streams are taxed and where responsibilities lie can help organisations better support workers, manage risk, and ensure compliance.

Source: AOL

In the US, the Internal Revenue Service (IRS) classifies anyone earning income from online content as self-employed from the very first dollar. This applies across platforms and formats from video content and podcasts to subscriptions, sponsorships, and affiliate activity, AOL reports.

Unlike traditional employees, such individuals are responsible for managing their own tax obligations, including setting aside and paying taxes throughout the year.

Self-employed individuals must pay both federal income tax and self-employment tax, which covers Social Security and Medicare contributions. Combined, this amounts to a 15.3 per cent tax on net earnings, reflecting both the employer and employee portions typically split in standard payroll arrangements.

Another important consideration is the requirement to make quarterly estimated tax payments. If an individual expects to owe $1,000 or more in federal tax for the year, the IRS reportedly requires payments to be made throughout the year rather than in a single annual settlement. These payments are generally due in April, June, September, and January.

Failure to meet these deadlines can result in underpayment penalties and interest charges. In early 2026, the IRS applied an interest rate of 7 per cent on underpaid tax, calculated daily, before reducing it to 6 per cent later in the year. Even where a taxpayer ultimately receives a refund, missed or insufficient quarterly payments may still trigger penalties.

There are, however, “safe harbour” thresholds that can help individuals avoid penalties. These include owing less than $1,000 in total tax, paying at least 90 per cent of the current year’s liability, or matching (or exceeding, for higher earners) the previous year’s tax paid.

The scope of taxable income is broad. It extends beyond direct payments from platforms or brands and includes a wide range of revenue streams such as advertising income, sponsorships, subscriptions, merchandise sales, affiliate commissions, and audience donations or tips.

Non-cash compensation must also be considered. Goods or services received in exchange for promotional activity, such as gifted products or experiences, may be taxable based on their fair market value.

For payroll and HR teams, particularly those supporting flexible or non-traditional workforces, these rules reportedly highlight the growing overlap between employment and self-employment models. Understanding how these income streams are taxed and where responsibilities lie can help organisations better support workers, manage risk, and ensure compliance.

Source: AOL