Updated for 2025 (Filing 2024 Taxes)
Yes, absolutely. Income earned from Twitch streaming is considered taxable income by both the federal government and the State of Vermont. The IRS treats Twitch streaming as a business, meaning you'll report your earnings as self-employment income.
Federal Requirements (Schedule C): You will report your Twitch income and expenses on Schedule C (Profit or Loss From Business) as part of your Form 1040. This form calculates your net profit (income minus expenses). Even if you don't receive a 1099-K from Twitch (which is common if you don't meet certain transaction volume thresholds), you are still legally obligated to report all income received.
Vermont Specific Rules: Vermont has a graduated income tax system. This means the tax rate you pay increases as your income increases. Your net profit from Schedule C will be added to your other income (like a W-2 job, if applicable) and taxed according to Vermont’s income brackets. Vermont also requires you to file a Vermont Income Tax Return (Form INC) to calculate your state income tax liability. You'll likely need to make estimated tax payments quarterly to avoid penalties, as income from self-employment isn't subject to withholding like a traditional job.
As a Twitch streamer, you can significantly reduce your tax liability by claiming legitimate business expenses. Here are some common deductions:
Many first-time self-employed individuals are surprised by self-employment tax. When you're an employee, your employer pays half of your Social Security and Medicare taxes. As a self-employed individual, you're responsible for both the employer and employee portions, totaling 15.3% (12.4% for Social Security up to the annual wage base, and 2.9% for Medicare).
You'll calculate this tax on Schedule SE (Self-Employment Tax). The good news is you can deduct one-half of your self-employment tax from your adjusted gross income on Form 1040, which helps reduce your overall tax burden. Remember, self-employment tax applies to net earnings over $400.
Navigating self-employment taxes can be complex, especially with Vermont’s graduated income tax system and the requirement for potential quarterly estimated tax payments. I strongly recommend keeping meticulous records of all your income and expenses throughout the year. Consider using accounting software designed for freelancers or consulting with a qualified tax professional (like myself!) to ensure you're maximizing your deductions and complying with all federal and Vermont tax laws. Don't wait until tax season to start thinking about your taxes – proactive planning can save you time, money, and stress!
Don't let the IRS take more than their fair share. Use the software built for Twitch Streamers.
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