Google is making a significant change regarding the earnings made by YouTube producers. Information about this development, which is of particular interest to producers outside the USA, has begun to be sent to the producers.
Google noted that from June 2021 at the earliest, it will have to cut taxes on US earnings from payments to non-US content creators. That’s why the company will ask for tax information to be sent via AdSense in a few weeks to determine the correct amount of tax to be deducted from producers’ earnings. Producers must provide tax information by May 31, 2021. Otherwise, Google will have to cut up to 24 percent from the worldwide total earnings.
What do you need to do if you are a YouTube producer?
Over the next few weeks, Google will send an email to the producers asking them to submit their tax information via AdSense. The AdSense online tax tool will ask questions in six steps to determine whether US taxes apply to the producer. Google states that you can visit the Help Center to learn more about these changes and to see a list of tax information you need to prepare.
Why is Google making such a change?
Google states that, pursuant to Section 3 of the US Income Act, it is obliged to collect tax information from all creators who make money outside of the US, and to withhold tax from their earnings if they earn revenue from viewers in the US.
Regarding content producers outside the US, Google said that it will soon update its Terms of Service, and noted that when these updates are made, the earnings from YouTube will be treated as a concession in the context of US taxes. This change will affect how producer earnings are taxed, and Google will have to withhold taxes under US law.
If YouTube producers provide tax information, US taxes will only apply to US monthly earnings from AdSense (revenue from US viewers through ad views, YouTube Premium, Super Chat, Super Stickers, and Channel Memberships). If the tax information does not provide, the default higher individual backup withholding rate (24 percent of worldwide earnings) will apply for the tax rate. That is, you may experience a higher-than-normal cut, and this cut will apply not only to earnings from the US, but to earnings worldwide.