1. What Taxes Do You Need to Pay?
Sellers: You need to pay income tax, sales tax, and self-employment tax. If you earn over $20,000 from more than 200 transactions, TikTok will send you a 1099-K form. There are also deductions you can claim for your business expenses.
Affiliates: You need to pay taxes on payments over $600, and you’ll also get a 1099-K form from TikTok.
2. Where to Find the 1099-K Forms?
Sellers: Go to the Seller Center app, navigate to Settings > Tax Information > Tax Forms.
Affiliates: Go to the TikTok app, then Earnings > Tax Information, and look for “TikTok Shop 2024 1099-K.” This form shows your earnings as an affiliate.
3. Do I Still Report Income If I Don’t Get a 1099-K Form from TikTok?
Yes, you must report all your income to the IRS, even if you don’t receive a 1099 form.
4. How to Handle Tax Errors or Mistakes on Form 1099-K?
Keep accurate records of your earnings. Contact TikTok support and keep email documentation if you find errors. If you need more time to correct the forms, submit Form 4868 to the IRS for an extension until October 15th, but remember to pay estimated taxes on time.
5. What Can I Write Off as Business Expenses?
Sellers: You can write off advertising, marketing, business meals, phone bills, internet, email hosting, financial fees, insurance, office supplies, rent, utilities, shipping, packing, and travel expenses.
Affiliates: Deduct advertising expenses, supplies for live streams (like ring lights and microphones), and products you bought to promote in your videos.
6. Should I Pay Taxes on Free Samples?
Sellers: You can write off the cost of free samples given away for promotion and marketing.
Affiliates: You need to report the value of free samples as income based on their selling price, as it’s considered a trade for your promotional services.
7. How to Add Tax Information on TikTok Shop Seller Center?
Once approved as a seller, go to your Seller Center app, click on verify tax information, enter your name, email, and address, review your W-9, and verify your federal tax info. Select your business type: if you’re using an SSN or ITIN, choose individual; if you have an EIN, choose non-individual/entity.
In conclusion, understanding and managing your tax responsibilities as a TikTok seller or affiliate is essential for legal compliance and financial health. By following the guidelines on tax payments, documentation, and deductions, you can effectively handle your tax obligations and focus on growing your business. Remember to keep accurate records, seek professional advice when needed, and utilize available resources to streamline your tax process.