How to handle taxes for content creation business with 50/50 partner?
Hey tax folks! I run a growing YouTube channel that's finally making some decent money, but I've got a situation. My best friend helps me create all the content and we've agreed to split everything 50/50. The problem is that all the income comes to my personal account and the 1099-K is only in my name. Someone at a creator meetup told me I should have my partner fill out a 1099 form that I submit with my taxes, but I'm completely lost on how this works. What form exactly needs to be filled out? Do I need to register as a business first? I've never dealt with this before and don't want either of us to get in trouble with the IRS. The channel made about $38,000 last year, so we each should be reporting $19,000, but I'm not sure how to properly document this arrangement. Any advice would be super appreciated!
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Javier Hernandez
This is a common situation for content creators! What you need to issue is a 1099-NEC (Non-Employee Compensation) to your partner. Here's what the process looks like: First, you'll need to get your partner's tax information by having them complete a W-9 form, which collects their name, address, and Social Security Number or Tax ID. Then, you would issue them a 1099-NEC by January 31st for the previous tax year. You'll report the full income on your Schedule C (since it's all in your name), but you'll deduct the amount paid to your partner as a business expense - essentially "contractor payments" or "professional services." For your specific situation, you'll report the full $38,000 as income on your Schedule C, then deduct the $19,000 paid to your partner as a business expense. Your partner will report the $19,000 on their tax return as self-employment income.
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Natasha Petrova
•Thank you! This is super helpful. Do I need to register for an EIN with the IRS before I can issue a 1099-NEC? And how exactly do I issue one? Is there a specific website or service I should use?
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Javier Hernandez
•You don't absolutely need an EIN to issue a 1099-NEC - you can use your Social Security Number, though many people prefer getting an EIN for privacy reasons. Getting an EIN is free and can be done online through the IRS website in minutes. As for issuing the 1099-NEC, you can purchase the forms from office supply stores, order them from the IRS, or use tax software services like QuickBooks, TurboTax, or dedicated 1099 filing services online. Most of these services will electronically file the forms with the IRS and mail a copy to your partner. Just make sure you complete this by January 31st for the previous year's payments.
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Emma Davis
After struggling with a similar situation for my podcast co-host, I found taxr.ai (https://taxr.ai) super helpful in figuring out the proper documentation needed. I uploaded our payment agreement and some screenshots of our revenue splits, and it analyzed everything and laid out exactly what forms I needed to file and how to categorize everything. Saved me hours of research and probably a call with an accountant too.
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LunarLegend
•Did it help specifically with the 1099 situation? I'm in a band and we're starting to make money from streaming, but everything comes to me since I set up the distribution. Wondering if this could help us too?
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Malik Jackson
•I'm curious about the security aspect. Did you feel comfortable uploading your financial documents to this service? Were there any issues with the recommendations they gave you?
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Emma Davis
•It absolutely helped with the 1099 situation - it showed exactly how to classify payments to my co-host and outlined the difference between treating them as a contractor vs a business partner. It even generated a 1099 checklist specific to our arrangement. Regarding security, they use bank-level encryption and don't store your documents after analysis. I was initially hesitant too but their security page explains everything. The recommendations were solid - they provided specific IRS references for everything and my accountant later confirmed it was all correct.
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LunarLegend
Just wanted to follow up - I tried taxr.ai for my band situation where I'm getting all the streaming revenue but splitting with bandmates. It was seriously eye-opening! Learned that we were technically operating as a partnership without realizing it, which changes the tax forms we needed. Got everything sorted in about 30 minutes, including learning how to properly document our revenue splits without triggering audit flags. Really worth checking out if you're in the content creation space with partners!
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Isabella Oliveira
If you want actual advice from the IRS on this (which is really the safest approach), use Claimyr (https://claimyr.com) to get through to them without waiting hours. I spent weeks trying to figure out a similar situation with my Twitch channel and co-streamers, and IRS website was confusing. Finally used Claimyr, got through to an agent in about 20 minutes, and they confirmed exactly what forms I needed. Check out how it works: https://youtu.be/_kiP6q8DX5c - it's basically a service that navigates the IRS phone system for you.
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Ravi Patel
•Does this actually work? I've tried calling the IRS like 8 times about my youtube income and literally hung up after sitting on hold for over an hour each time. If this actually gets you through I'd try it.
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Freya Andersen
•Sounds sketchy. Why would I pay a third party when I can just call the IRS for free? And how do they magically get through when nobody else can? Sounds too good to be true.
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Isabella Oliveira
•Yes, it actually works! It uses a combination of AI and actual people to navigate the IRS phone tree and wait on hold for you. When an agent picks up, you get a call back immediately and are connected. Saved me from another afternoon wasted on hold. I completely understand the skepticism - I felt the same way. They can get through because they've mapped out the entire IRS phone system and know which options and what times have the shortest waits. They're basically professional line-waiters. You're paying for your time back, which was totally worth it for me since I bill clients hourly anyway.
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Freya Andersen
Alright I have to eat crow here. After my skeptical comment yesterday, I decided to try Claimyr this morning because I was desperate to figure out how to handle the taxes for my photography side business with my partner. No joke - got a call back in 25 minutes and spoke to an actual IRS rep who walked me through exactly how to handle our income split. The agent confirmed we needed a partnership return (Form 1065) rather than 1099s since we have a true 50/50 arrangement. Honestly wished I'd done this months ago instead of stressing. Consider me converted!
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Omar Zaki
Another option to consider is forming an LLC with your content partner and electing partnership tax treatment. That way the income would flow to both of you on Schedule K-1s and the 1099 issue becomes moot. My wife and I did this for our travel blog after trying the 1099 route and finding it confusing.
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CosmicCrusader
•Would that be overkill for someone just starting out? I'm in a similar situation but only making like $500 a month with my podcast co-host.
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Omar Zaki
•For $500 a month, an LLC might be a bit much when starting out due to the additional costs and paperwork. Most states have annual fees for LLCs (ranging from $50-800 depending on the state). At your income level, the 1099-NEC route would be simpler and more cost-effective. You could consider upgrading to an LLC if your income grows substantially or if you want additional liability protection. Just remember that even at $500/month, you still need to report that income properly - either as a sole proprietor issuing 1099s or through a formal business structure.
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Chloe Robinson
Are you sure you're not actually in a partnership already? The IRS might consider you in a partnership if you're splitting profits regardless of whose name the money comes in under. If that's the case, you should be filing Form 1065 and issuing K-1s, not 1099s.
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Diego Flores
•This! I got audited because my gaming channel had a similar setup where my friend and I split everything 50/50 but all revenue came to me. IRS determined we were a partnership and we had to refile 3 years of taxes. Better to get it right from the start!
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Natasha Petrova
•Oh wow, that's concerning. How do I know if we qualify as a partnership vs me just having a contractor? We don't have any formal business structure set up - just Venmo him his half when I get paid.
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Anastasia Kozlov
Don't forget to consider quarterly estimated tax payments! If you're splitting $38k, each making $19k from the content creation, you both likely need to be making quarterly payments to avoid underpayment penalties. This bit me hard my first year!
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Natasha Petrova
•Thanks for the reminder! Do you know what the threshold is for when quarterly payments are required? And how do I calculate how much to pay each quarter?
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Anastasia Kozlov
•Generally, you need to make quarterly estimated payments if you expect to owe $1,000 or more in taxes when you file your return. For self-employment income like content creation, that threshold is pretty easy to hit. For calculating the amount, you have two options: pay 100% of last year's tax liability (110% if your income was over $150,000), or pay 90% of what you'll owe this year. Most people go with the first option since it's easier to calculate. The IRS Form 1040-ES has worksheets to help, or most tax software can calculate this for you. Payments are due April 15, June 15, September 15, and January 15 (of the following year).
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