Tax Memo – OnlyFans Content Creator Income Is Taxable, Include It On Your Tax Returns

Definition: OnlyFans Content Creators, through online web camera access, exchange visual, physical and emotional attention for cash and other compensation, with subscribers. This other compensation may take the form of property (gifts), and payment of their debts and living and other expenses.

These OnlyFans content creators are usually girls or young women and are engaging in a fee for service arrangements, very similar to Sugar Babies. This activity generates taxable income just as Sugar Baby activity does.

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Many OnlyFans Content Creators can earn much more money than they could at a 9-5 job. 

I believe that under the IRS “Substance Over Form” doctrine, these arrangements would be deemed to be “fee for service” and all proceeds would be taxable to the OnlyFans Content Creator. 

As these OnlyFans Content Creators’ incomes have skyrocketed, I believe the IRS and state governments will pursue the income taxes they are owed.

Ok, so now you know that the money you are earning on OnlyFans is taxable. How do you handle your taxes?

Remember, OnlyFans Content Creators are business owners. So that means that you will be able to take expenses that you incur for your OnlyFans business.

Below are examples of expenses that you can write off. Remember, anything that you spend money on that relates to your business can be deducted. You want to keep track of this and that is another good reason why having that separate checking account is a great idea.

Deductible expenses include, but are not limited to:

• Advertising
• Costumes
• Makeup & Hair Styling
• Beauty Supplies
• Dry Cleaning
• Photography
• Props
• Travel
• Repairs & Maintenance 
• Utilities
• Insurance
• Tolls & Parking
• Legal and professional fees
• Commissions
• Interest Expense
• Tax return preparation
• Telephone
• Office Supplies
• Postage
• Clerical help
• Bank charges
• Equipment purchased (Computers, Cameras, Cell phones, Printers)
• Business miles driven
• Dues & Subscriptions
• Office Rent
• Web Services
• Internet Related
• Bank Charges
• Facsimile

You’re OnlyFans income will come into that separate checking account and then use that money to pay your business expenses. Then transfer the net money left over into your regular personal account. This will make it much easier at year end for us to total your expenses and do your accounting so we can get your tax return done.

Most importantly, this separates your main checking account from your OnlyFans Baby income.

Do not pay personal expenses out of this business account. Transfer money to your personal account and pay personal bills out of there.

TAX TIME

At the end of the year it will be tax time. You will fill out a form Schedule C, Profit or Loss From A Business, and include that on their form 1040 tax return.

All of the accounting that we discussed a few moments ago would go on this form. So your income will be shown at the top and your various expenses will be shown in the middle part of the form. You will pay income tax and self-employment tax on the net income shown on your Schedule C.

SELF-EMPLOYMENT TAX

Your net income will be subject to ordinary tax as well as self-employment tax. This is something that people often miss and so their tax bills are higher than they expected.

Self-employment tax is how business owners pay their FICA tax. Many of you who have had jobs before have seen FICA taxes taken out of your paychecks. Social Security and Medicare Taxes are what comprise FICA tax. When you’re self-employed you also have to pay this. FICA tax is 15.3% of your net income and this is in addition to your ordinary taxes that you pay.

It is extremely important that you put aside money every time that you are paid so you can pay your estimated taxes later. Again, the money that you receive as an OnlyFans Content Creator is not the amount of the money you have available to spend on your personal expenses.

It is vital that you have a good CPA working with you to make sure your accounting gets done on a monthly basis and also that your estimated taxes are calculated during the year.

It is very important that you realize that you can’t wait to pay the taxes that you owe until April 15th. Self-employed people with their own businesses need to pay their taxes quarterly during the year. If you don’t pay taxes that way, and you wait to pay when you file your tax returns, then you’ll be subject to penalties and interest for late payment.

All of my business clients work with me many times during the year to keep their accounting up to date as well as to calculate their estimated taxes and get them paid during the year.

My CPA firm will help you every step of the way with your OnlyFans business.

DOCUMENT RETENTION

I want to give you some document retention advice.

1. Save all of your business records for 7 years. 
2. Take your time! For many of you this might be the first time you’re filling out paperwork like this. But don’t be intimidated you can definitely handle it.
3. Be sure to save copies of everything either in PDF form in a directory on your computer or in paper form in a folder. Remember that you can print many screens in your browser window to PDFs. This is called a paper trail and when in doubt save as many applications and other online documents that you can as PDFs.
4. You also want to keep copies of all of your receipts for all of your business expenses that you’re going to have.
5. Keep pdf copies or paper copies of all of your business bank statements and be sure to also have copies of all checks that you have written.

These arrangements make getting gainful employment a financial loss for the young women as follows:

Think about a scenario. An 18 year old female, instead of getting a $25,000 per year job where she nets $20,000 after taxes, becomes an OnlyFans Content Creator and finds thousands of boys and men who, in total, will pay her sometimes ten times that amount each year, and she has zero taxes deducted.

That 18 year old female has no incentive to work elsewhere. 

So we can now see why the federal and state governments are going to be scrutinizing these transactions much more closely.

More and more younger women are taking this route, especially during the lockdown. 

If you are concerned about the OnlyFans or Sugar Baby income you are making, and want to learn how to properly and legitimately report your income on your tax returns, call me on 732-673-0510. The penalties for tax evasion are severe but it is easy to avoid them by complying with the law.

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Please reach out to me without hesitation with any tax, business or

accounting question, and to schedule a consultation.

Tax Laws are complex.

It is very easy to make mistakes that can incur penalties.

Do you have a Tax, Accounting or Business Question?

Call Me Immediately. (732) 673-0510.

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Remember,

“If We Aren’t Working For You, Then You Aren’t Working At Your Best”

Chris Whalen, CPA
(732) 673-0510
81 Oak Hill Road
Red Bank, NJ 07701
www.chriswhalencpa.com

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