On March 9, 2021, YouTube announced new tax measures for creators outside the US.
This means that creators who have previously been receiving their full earnings, will now get a sizeable tax deduction every month.
The only countries that will not be affected are those that the US has a double taxation treaty, like the UK.
This new move by YouTube is based on the US Internal Revenue Code Chapter 3, which requires them to collect tax information from all creators outside the US. (US creators are under different tax codes).
After collecting the tax information, YouTube will determine based on a certain criteria whether the creator will pay any US tax. As mentioned, one of them is whether the creator’s country and the US have any tax treaty that prevents such taxation.
How much US YouTube tax will South Africans pay?
Creators in a few countries like the UK and Canada will not see any new taxation. Their countries have a 0% tax treaty with the US, which means that money made in either country is not taxable.
South Africa will not enjoy such absolute privilege.
However, buried inside a 1997 tax treaty between the US and South Africa (God bless Mandela), it appears that instead of paying the full 30%, South Africans will only be required to pay 15%.
That means that 15% of US earnings will be deducted and withheld.
Remember, this is not a tax on your entire YouTube earnings. This new tax only touches your earnings from US viewers.
South Africans whose main audience is in South Africa may only see some slight deductions.
However, if most of your views or income share are from the US, you may be looking at a substantial hit.
Your YouTube analytics should provide detailed reports on where your audience comes from in any given month.
How to fill your YouTube tax information
You will be able to update your US tax information on your Adsense account, rather than your YouTube account.
Under Payment Settings, you will find a form under ‘manage your US tax information’. After getting through a series of check boxes, your form will be available.
For individual creators, this form will most likely be the W-8BEN form. For businesses and companies, the form will be W-8BEN-E.
All creators, even those whose accounts are managed by an MCN are required to fill this form.
Once you have submitted your tax form, the tax withholding rate will be revealed to you.
What will happen if you do not provide your tax details.
If you fail to fill in the US tax form within the speculated time, Google is required to presume that you are a US citizen, and thus withhold the maximum taxable amount – Individual (24%), Business (30%).
This will be from your worldwide earnings, and not just US earnings.
So, for example – Using a South African who makes $1000 globally but just $200 from the US:
Tax form submitted – 15% of 200 = $30
Tax form not submitted – 24% of 1000 = $240
When is the deadline for submitting YouTube US Tax form?
Every YouTuber is required to fill and submit the US tax form, whether they make any money from the US or not.
Technically there is no deadline.
However, Google will begin deducting taxes from June, 2021.
That means they will deduct from your account based on the information that is available at that time.
To avoid the maximum 24% deduction, submit your form as early as possible.
Can you get a refund from previous withholdings?
Assuming you forget to submit your form before June, 2021, you can still do it before December 31, 2021. (or end of calendar year) and get your money back.
If YouTube determines that you qualify for a lower rate, the excess tax withheld since June will be refunded to you.