How is income reported?
All course sales, coaching sessions, memberships, workshops, licensing fees and affiliate commissions are business income on Schedule C. Payment processors and course platforms usually report on Form 1099-K, and corporate coaching clients may send Form 1099-NEC. Report everything, with or without a form. See reporting income without a 1099.
Free memberships, discount codes and bonuses given to students are not income, but they reduce what you actually collect.
What can you deduct?
| Expense | Notes |
|---|---|
| Course platform, website, email and scheduling software | Fully deductible |
| Advertising and launch costs | Fully deductible |
| Video editors, designers and virtual assistants | As contractors. See paying contractors |
| Cameras, microphones, lighting and computers | Often fully in year one. See Section 179 vs bonus |
| Professional development and coaching certifications | If they maintain or improve skills in your existing business |
| Home office | If it meets the tests. See home office deduction |
Keep records showing which course or program each cost relates to.
Do online courses carry sales tax?
In some states. US states differ on whether they tax digital products, online courses and memberships, and whether live coaching counts as a taxable service. Where you have economic nexus in a state that taxes them, you register and collect. Platforms that act as merchant of record, selling the course on your behalf, may collect for you. See economic nexus and how sales tax works.
See sales tax on software and digital products and sales tax on services.
What about customers abroad?
Many countries tax digital services sold to their consumers, often from the first sale for sellers based outside the country. The European Union and the UK, for example, require non-resident sellers of e-services to consumers to register and charge VAT, usually through a simplified scheme, unless a marketplace or merchant-of-record platform handles it. Sales to businesses are usually handled by the buyer instead. Check this before selling internationally.
Sales to businesses abroad are usually handled under the buyer's own VAT rules, so collect each business buyer's VAT number where required.
How are payment plans and refunds handled?
Most creators use the cash method, so instalments are income when received, not when the course is sold. Refunds reduce income in the year they are paid. Commissions paid to affiliates who promote your course are deductible, and US affiliates paid $2,000 or more in 2026 should receive Form 1099-NEC from you, unless a platform handles the reporting.
How should course creators organize?
Choose how you sell
Through a merchant-of-record platform, or directly with your own payment processor and tax registrations.
Keep a separate account
For platform payouts and expenses.
Track sales by country and state
For sales tax and VAT thresholds.
Pay quarterly estimates
What does an example look like?
A coach earns $60,000 from a course sold through her own website and $30,000 from one-to-one coaching. She spends $7,000 on software and platforms, $12,000 on ads and $8,000 on an editor. Her net profit of $63,000 is subject to income and self-employment tax, and she checks whether the states and countries where her course buyers live tax digital courses.
What if you live outside the US?
Coaching delivered from abroad is generally foreign-source income for a non-resident, and course sales by a non-resident without a US business are usually not taxed in the US either. Platforms may ask for Form W-8BEN or W-8BEN-E. See effectively connected income.
Selling courses or coaching?
We bring your platform and payment income together, track deductions, check your sales tax and VAT exposure and file your return.
Questions people ask
How are online course sales taxed?
As self-employment income on Schedule C, with income and self-employment tax on the profit.
Do I charge sales tax on online courses?
In some states, if you have nexus there and the state taxes digital products or online courses. Merchant-of-record platforms may collect for you.
Do I need to charge VAT to customers in the EU or UK?
Often yes for sales of digital services to consumers, unless a platform handles it.
What can coaches deduct?
Platform and software costs, ads, contractors, equipment, qualifying training and a qualifying home office.
Sources
Every fee, date and rule on this page was taken from these official and primary sources.
- IRS: Gig economy tax center
- European Commission: VAT One Stop Shop
- UK government: VAT on digital services to consumers
Rules and fees change. If you are reading this long after October 1, 2026, confirm the figures with the source before you rely on them.
Related guides
More in Freelancers and self-employed
This guide is general information. It is not tax or legal advice for your situation.