Why does Google withhold US taxes?
Starting in 2021, in accordance with Chapter 3 of the US Tax Code, Google must withhold taxes from YouTube creators and transfer them to the US Internal Revenue Service. This applies only to revenue from US viewers.
Tax is collected on all types of YouTube earnings: views, ads, YouTube Premium subscriptions, memberships, and other ways to make money from your channel.
Types of US tax rates on YouTube income
The tax rate is automatically assigned based on the country of your tax residency as specified in the AdSense form. Some countries have agreements with the US to avoid double taxation, in which case the rate is lower.
The AdSense tax form must be filled out, otherwise Google will withhold tax from all your YouTube earnings!
Tax form not filled out
The withholding amount will be 24% of all YouTube income for the month, regardless of the countries where it was earned.
Tax rate — 24%.
Tax form completed, and you reside in the US
No additional tax required.
Tax rate — 0%.
The tax form is filled out, and you do not reside in the US
Tax is withheld only from the US portion of your income. The rate depends on your country of tax residence as specified in your AdSense form and whether your country has a double taxation agreement with the US.
Tax rate — from 0% to 30%.
What is a double taxation agreement?
This is a special agreement that the US has with a bunch of countries. It allows residents to receive special tax breaks and pay income tax at a reduced rate.
If the country of your tax residence specified in AdSense has such an agreement, the system will determine this automatically. You can view tax rates and conditions on the official IRS website by selecting your country from the list.
How to calculate the approximate amount of withholding
You can calculate the estimated tax amount from your YouTube channel's monthly income yourself:
1. Go to YouTube Analytics, open the «Revenue» report, select the payment method and time period;
2. Filter the data by location by selecting the United States;
3. Log in to your AdSense account and find your tax rate information.
You can find it in the tax form: to do this, go to «Income type» → «Rate» → «Other copyright»;
4. Multiply your income from users (point 2) by your tax rate from the Other Copyright section (point 3).
This method can only be used to calculate an approximate tax amount. You can see the final tax amount in your YouTube earnings report.
Calculation example
Let's take as an example a creator who is a tax resident of the UAE and receives $1,000 per month from YouTube. Part of the revenue from US viewers is $300 out of $1,000.
If they fill out the tax form, the US tax will be 30% of $300 (since the UAE doesn't have a double taxation agreement with the US).
Let's calculate income
1. The creator's income from the US audience is $300. The tax rate for this income is 30%.
Let's calculate the approximate amount of tax by multiplying these values: 300 * 30% = 90.
Result: the tax from $300 is about $90.
2. Now let's subtract the approximate tax amount from the creator's total income: 1000 - 90 = 910.
Result: the creator receives $910 after US tax deduction
If the creator fails to fill out the tax form, the US tax will be 24% of the total monthly income ($1,000), i.e. $240.
Result: the creator receives $760.
How US taxes affect express payments
By using express payments, you receive your income earlier than YouTube accrues it and we receive a report from Google. US tax will also be withheld from the amount of express payments at the rate applicable to your country of tax residence as specified in AdSense.
After receiving the total monthly analytics from Google, we will recalculate the tax amount.
If there are discrepancies in your favor, we will credit the difference to your account.
Don't forget to fill out the AdSense form and send us information about your current tax rate! AdSense does not send this information automatically, and we will be forced to apply a 24% rate to express payments.
How to provide tax information to Google?
Log in to your AdSense account and open the «Payments» section, then select «Payment details» → «Manage settings».
Find the line «Tax Information (USA)» and click on the pencil icon next to it. Next, select the appropriate form by following the steps on the page and fill it out. You can learn how to do this correctly in detail from this article.
After filling out the tax form, be sure to check its status!
If the form is accepted, you will see the status «Approved».
The tax form must be submitted by the 10th day of each month. If it is submitted later, the approved tax rate will only take effect on the 1st day of the following month.
Can I get a tax refund?
Yes, in some cases. For example, if you have moved to another country with a lower tax rate. To do this, you need to update your tax information in AdSense by the end of the calendar year and fill out an official application to confirm the change of country. The overpaid tax amount will be refunded to your account.
How to view tax reports?
AdSense will show the exact amount of tax withheld in your earnings report. Google also provides a tax form (1042-S or 1099-MISC) with information about withholdings for the previous year by March 15 each year. You can request a copy by filling out the form.
Do I need to do anything if I don't receive income from viewers in the US?
Yes, you need to fill out the AdSense form and indicate your country of tax residence.
All creators who earn income from YouTube participate in the Partner Program, so they must provide Google with the necessary tax information.
If you are not currently receiving income from viewers in the US, US tax will not be collected.
Will I have to pay income tax on YouTube earnings twice — in the US and in my own country?
Yes, you are required to pay taxes both in your home country and in the United States. However, with the help of double taxation agreements, your tax rate can be significantly lower.
If you have any questions, please consult a tax advisor in your country.