This article goes over how Teachable school owners, authors, and affiliates can handle US federal and state income tax, and EU VAT, for money received through Teachable. To learn more about submitting and receiving tax forms, see this article.
U.S. Federal Tax
If you are using Teachable’s payment gateway, then for tax purposes you will essentially be treated as an independent contractor, because the funds are paid by the student to Teachable, and then Teachable pays you (and your authors and affiliates).
This means that, as is the case with all independent contractors, you (whether you are an owner, author, or affiliate) will be issued a 1099 if your earnings through us exceed $500. We will request a W9 from you and that information will be used to send your 1099. This only applies if you are a U.S. person (a term inclusive of citizens, resident aliens, and qualifying entities).
NOTE: The figure we use for your 1099 is based on how much we paid you during that year, rather than your sales made during that year. This means that because of our payment schedule, sales made at the end of one year may be included in the form for the next year (e.g. if you make a sale on December 20 and are paid on February 1, that payment counts as 2017 earnings).
If you don’t meet the $500 threshold, simply report your earnings as miscellaneous self-employment income when you file your taxes.
NOTE: If you are using custom payment gateways through Stripe Connect or PayPal, you are fully responsible for any tax reporting related to your school (including issuing forms to authors/affiliates if necessary. You will not receive forms from Teachable.
U.S. State Tax
At this time, Teachable does not handle U.S. state sales taxes. If you find that you need to add additional taxes for your state, you may wish to add an average tax amount to the base purchasing price for the course, and then save that amount to pay your taxes.
To be fully EU VAT tax compliant, we are required to charge taxes on all transactions taking place in the EU that are processed through our Payment Gateways. This means that the tax percentage, which is calculated based on the country, will be added on top of the original course price for EU customers.
If you are using Teachable’s native payment gateway, we will handle all end-of-year filing on your behalf. If you are using a custom payment gateway, it will be your responsibility to file the appropriate taxes. Either way, you will not be receiving paperwork from Teachable dealing with VAT.