If you’re earning money through affiliate programs like Amazon Associates or TikTok Shop, you might be wondering: what really happens if I don’t report this income on my taxes? Maybe it’s just a few hundred dollars here and there. Or maybe you’re starting to see some real traction from your content and commissions are rolling in. Either way, not declaring your affiliate earnings could cost you more than you think.
In this post, we break down the consequences of not reporting affiliate income, how platforms share your data with tax authorities, and what you should do to stay safe, especially in 2025.
Yes, Affiliate Income Is Taxable—No Matter How Small
It doesn’t matter if you earn $10 or $10,000 through affiliate links. If you live in a country that taxes personal income (like the U.S., UK, Canada, Australia, or Germany), you are legally required to report all sources of income, including affiliate commissions.
For example:
An Amazon affiliate link in your blog that generates $150 in commissions
A TikTok video that drives $500 worth of product sales via your influencer link
Referrals from a tool like Canva or Bluehost earning you recurring payouts
All of these count as income and should be declared. Even if you didn’t receive a tax form like a 1099, you’re still responsible for reporting the earnings.
Tax Authorities Are Getting Smarter
In recent years, governments have tightened regulations around online income. With digital platforms under increasing pressure to report user earnings, you can’t assume your affiliate earnings go unnoticed.
For example:
In the U.S., platforms must issue a 1099-NEC or 1099-K once earnings hit $600 in a year
The EU has passed DAC7, which requires platforms to report seller and affiliate income to tax authorities
Payment processors like PayPal and Stripe are required to report transactions that meet certain thresholds
This means even if Amazon or TikTok doesn’t issue you a form, the payment platform or government may already know what you earned.
What Are the Consequences of Not Reporting Affiliate Income?
Failing to declare affiliate income can lead to serious consequences, especially if your earnings grow over time. Here’s what could happen:
Audits: If your spending or bank deposits don’t match your reported income, the IRS or your country’s tax agency may initiate a review.
Penalties: Late fees and penalties for underreporting can range from 5% to 25% of the amount owed.
Interest: Interest accrues on unpaid taxes from the date they were due.
Loss of deductions: If you’re self-employed and fail to report income, you can’t deduct related expenses, such as software, equipment, or subscriptions.
Reputation risk: For creators who work with brands, being flagged for noncompliance can affect future partnerships.
While a small one-time mistake may not raise alarms, repeated underreporting or ignoring notices can lead to bigger legal trouble.
How to Declare Affiliate Income Properly
Reporting your affiliate earnings doesn’t have to be complicated. Here’s how to handle it step by step:
Track every payment: Use a spreadsheet or an accounting tool to log each affiliate platform and the income received.
Save documents: Keep email confirmations, dashboards, and PayPal or bank statements.
Include the income in your tax return:
In the U.S., this is typically done on Schedule C (self-employment)
In other countries, check if your affiliate work counts as self-employed income or side business revenue
Deduct eligible expenses: You may be able to deduct costs like hosting, ad spend, course subscriptions, or tools like Canva or TubeBuddy.
File on time: Always meet tax deadlines to avoid penalties.
If you’re unsure how to classify your income, working with a tax advisor who understands digital businesses is a smart investment.
What If You Forgot to Report It in Previous Years?
If you earned affiliate income in past years and didn’t report it, you can still fix the issue.
Amend your return: Most countries allow amended returns for up to 2–3 years
Pay any owed taxes and penalties: Doing this proactively can reduce additional fines
Explain in good faith: If contacted by tax authorities, transparency helps show your intent to comply
It’s better to be honest now than to wait for a letter or audit.
Tools to Help You Stay Compliant
Digital creators and affiliate marketers can make tax season easier with tools such as:
QuickBooks Self-Employed: Expense tracking and tax estimates
Wave Accounting: Free tool for small businesses and freelancers
FlyFin: AI-powered tax software for freelancers and creators
Notion Templates: Track income and expenses in a custom dashboard
You don’t have to overcomplicate things. As long as you keep records and file your returns accurately, affiliate income becomes just another line item.
Long-Term Success Starts With Transparency
Affiliate marketing is a great income stream—but it’s still business income. The more serious you are about tracking and reporting, the more confidently you can grow. Brands and affiliate networks also take you more seriously when you run your operations like a business.
If you’re aiming for financial freedom through content creation, don’t let tax mistakes hold you back. Treat affiliate income as a real part of your portfolio—and declare it.