TikTok is a popular short-form video app that allows users to create and share videos up to 3 minutes long. Since launching in 2016, it has grown rapidly to over 1 billion monthly active users worldwide. TikTok has become a platform where creators can build a massive following and make a living through their content.
To support creators on the platform, in 2020 TikTok launched the Creator Fund program. This program provides creators with monetary compensation for the videos they post on TikTok based on their engagement and overall performance. The Creator Fund aims to help creators produce content as their full-time career and grow the TikTok creator community.
The TikTok Creator Fund started with a $200 million fund in the US and has since expanded to other regions and countries. Eligible creators can apply to join the fund and earn money directly from TikTok based on factors like views, engagement, and overall popularity on the platform. With the Creator Fund, TikTok aims to establish itself as a creator-first platform that financially rewards top talent.
What is the TikTok Creator Fund?
The TikTok Creator Fund is a program launched by TikTok in 2020 that pays creators for views on their original TikTok videos. It was designed as a way for TikTok to support and reward creators on the platform for producing engaging content.
According to TikTok, the Creator Fund provides creators “with predictable earnings, so they can dedicate more time to their craft, turn creativity into livelihood, and get discovered by even larger audiences.”
To be eligible for the fund, creators must meet certain criteria like having at least 10,000 authentic followers and posting original videos that follow TikTok’s community guidelines. There is an application process to join the fund.
Once accepted into the fund, creators can earn money based on the engagement their videos generate. The amount paid per view varies and is based on factors like the region, content quality, and overall viewership on TikTok. Payments are calculated monthly and sent to creators via direct deposit.
The Creator Fund allows TikTok to invest in and incentivize its creative community. It gives qualifying creators a way to monetize their content directly through the platform.
Who Qualifies for the TikTok Creator Fund?
To qualify for the TikTok Creator Fund, creators must meet certain eligibility requirements. As per TikTok’s Creator Portal, to join the fund you must:
- Have at least 10,000 authentic followers
- Have at least 10,000 video views in the last 30 days
- Be 18 years or older
- Post original content that follows TikTok’s Community Guidelines
TikTok emphasizes that creators must have authentic, real followers to qualify. Fake or bot followers do not count towards the 10,000 follower minimum. You also must be producing and posting original, quality content regularly to meet the 10,000 video view threshold.
In addition to these baseline stats, your account must be in good standing without any violations of TikTok’s Terms of Service or Community Guidelines. This includes avoiding posting misleading, dangerous, or inappropriate content.
As per TikTok’s Newsroom article, you must also:
- Be based in an eligible country: currently the US, UK, France, Germany, Spain or Italy.
Meeting these stats and account requirements qualifies you to apply for TikTok’s Creator Fund and start earning money based on your original content’s performance.
Sources:
https://newsroom.tiktok.com/en-gb/tiktok-creator-fund-your-questions-answered
https://www.tiktok.com/creators/creator-portal/en-us/getting-paid-to-create/creator-fund/
How Much Do Creators Earn?
The amount creators earn through the TikTok Creator Fund varies based on factors like traffic and engagement. According to research, TikTok pays between $0.02 and $0.04 per 1,000 video views to creators in the program (Source). While TikTok has not publicly confirmed its per view rate, top creators have revealed these estimated earnings based on their own payouts from the platform.
So for example, if a TikTok video gets 1 million views, the creator would earn around $20 to $40 through the Creator Fund. However, earnings ultimately depend on the views and engagement each specific video receives. The more views and engagement a video gets, the more the creator will earn from that individual video. TikTok bases the amount paid out on both views and engagement metrics.
It’s important to note that income from TikTok and the Creator Fund makes up only a portion of earnings for most creators. Many also generate revenue through promotions, brand sponsorships, merchandise, tips, and other monetization methods. But the Creator Fund provides a way to earn directly from TikTok based on content performance.
How are Creator Fund Earnings Paid Out?
Earnings from the TikTok Creator Fund are paid out on a monthly basis via direct deposit into a creator’s designated bank account. To receive payment, creators must link a Payoneer account or a bank account in the regions where TikTok operates to their TikTok Creator account. Payments are made by the 22nd of each month for earnings accrued in the previous calendar month.
The minimum payout threshold is $10 USD. This means a creator’s earnings for the month must be at least $10 before the amount will be paid out. If a creator’s earnings for the month are below $10, the amount will roll over and be added to the next month’s payout.
Once the monthly payout amount is processed, the funds are directly deposited into the creator’s connected Payoneer account or bank account. This allows creators convenient access to their Creator Fund earnings.
TikTok pays creator funds monthly in arrears, meaning the platform confirms a creator’s views for the previous month before doling out payment by the 22nd. This allows the company time to prevent fraud and ensure creators are paid accurately based on legitimate views of their content.
Are Creator Fund Earnings Taxable?
Yes, earnings from the TikTok Creator Fund are considered taxable income. The IRS categorizes these earnings as “nonemployee compensation” since creators are not employees of TikTok but rather independent contractors. This means you are responsible for paying income tax and self-employment tax on your Creator Fund earnings.
According to the IRS, you must report all income you receive from sources like the TikTok Creator Fund when you file your taxes. There is no minimum payment threshold – even if you only earn a few dollars, it still counts as taxable income.
Some key things to know about the taxability of TikTok Creator Fund payments:
- The income is taxed as ordinary income at your regular income tax rate.
- You must pay self-employment tax of 15.3% on your net earnings.
- TikTok does not withhold any taxes from Creator Fund payments.
- You receive a 1099-NEC form reporting your annual earnings.
In summary, TikTok Creator Fund earnings are considered taxable income by the IRS. It is your responsibility to report the income and pay any income and self-employment taxes owed.
How Should You Report TikTok Income on Taxes?
If you earn money through the TikTok Creator Fund, you should report this income on your tax return as self-employment income. The IRS considers income earned from social media platforms like TikTok to be taxable self-employment income.
To report your TikTok earnings, you will need to file Schedule C (Form 1040) with your personal income tax return. Schedule C is used to report income and expenses from a sole proprietorship or single-member LLC. On Schedule C, you will report gross income from the TikTok Creator Fund in the gross receipts or sales field. You can also deduct allowed business expenses that are directly related to earning your TikTok income.
It’s important to keep good records of your TikTok income and expenses. You may need to provide documentation if your tax return is audited by the IRS. Save your TikTok Creator Fund monthly statements and transaction records. Track business expenses throughout the year. Consider using accounting software or working with a tax professional to help report your TikTok earnings accurately.
Reporting your Creator Fund income protects you from penalties for failing to report self-employment income. Paying taxes also establishes your credibility as a business earning income through TikTok.
(Source: https://blog.turbotax.intuit.com/self-employed/do-creators-pay-taxes-on-money-earned-51416/)
What Tax Documents do You Get from TikTok?
If you earn over $600 through the TikTok Creator Fund in a calendar year, TikTok will send you a Form 1099-NEC. This document reports your earnings to both you and the IRS so your income can be properly taxed.
To access your tax documents from TikTok:
- Go to your profile and tap the 3-line menu in the top right corner
- Select “Settings and privacy”
- Choose “Manage account”
- Tap “Tax information”
Here you can view any tax forms TikTok has issued to you, including the 1099-NEC. The forms will be available by January 31st for the previous tax year. Be sure to download and save your 1099-NEC to have handy when filing your taxes.
If you earned less than $600 in a tax year, TikTok does not have to issue you a 1099-NEC. However, you are still required to report any TikTok income when filing your taxes using other income documentation.
Strategies to Reduce Tax Liability
There are a few strategies TikTok creators can use to reduce their tax liability on earnings from the TikTok Creator Fund:
Business Deductions
TikTok creators who earn significant income may want to consider forming an LLC or corporation for their TikTok activities. This would allow them to take business deductions on expenses related to content creation like equipment, software, internet service, travel, etc. Proper documentation is required to deduct business expenses. Consult a tax professional for advice on allowable deductions.
Estimated Quarterly Payments
Another way to reduce tax liability is by making quarterly estimated income tax payments instead of waiting until tax time. Paying taxes quarterly helps avoid penalties for underpayment. The IRS requires estimated payments once annual net income exceeds $1,000 for self-employment tax and $1,000 for income tax. Use Form 1040-ES to calculate required estimated payments.
Incorporation
Forming a corporation allows income to be taxed at corporate rates, which are typically lower than personal rates. Business expenses can also offset taxable income. However, consult a tax professional because incorporating comes with administrative requirements and costs. Income may still be subject to additional personal taxes when distributed as salary or dividends.
Conclusion
In summary, earnings from the TikTok Creator Fund are considered taxable income by the IRS. While TikTok does not directly withhold taxes, creators are still responsible for reporting and paying taxes on this income.
TikTok will send a 1099 form if your total earnings exceed $600 in a calendar year. Even if you don’t receive a 1099, you are still required to report TikTok earnings on your tax return.
There are some strategies creators can use to reduce their tax liability, such as deducting equipment and other business expenses. But in general, TikTok income is treated like any other self-employment or 1099 contractor earnings.
It’s important for TikTok creators to be aware that their earnings are taxable, track creator fund payments, retain documentation, and plan for tax obligations. With proper planning, creators can make sure they are compliant with IRS regulations and not face penalties or surprises at tax time.
