Teachable & Udemy Course Income Taxes: How to File in 2026

Okay, fellow course creator, let’s talk about the elephant in the room: taxes. You’ve poured your heart and soul into creating that amazing online course on Teachable or Udemy. You’ve taught, you’ve inspired, and you’ve finally started seeing those sales numbers tick up. Awesome! But then, the dread sets in. “How do I file taxes on this?” “Will the IRS consider this a hobby or a business?” “What forms do I even need?”

Trust me, I’ve been there. My first year selling digital products, including a few mini-courses, I was a nervous wreck. I was tracking income in a messy spreadsheet, praying I hadn’t missed anything. The thought of an audit made my palms sweat. But here’s the thing: once you understand the basics, it’s far less terrifying than it seems. This isn’t rocket science, it’s just a set of rules you need to learn. And as someone who’s navigated the wild world of gig economy taxes for years, I’m here to walk you through filing taxes on your Teachable and Udemy course income for the 2026 tax year. We’re going to break it down, cut through the jargon, and make sure you’re set up for success (and no nasty surprises from the IRS).

Quick Facts: Filing Taxes on Your Online Course Income in 2026

You’re a Small Business Owner: The IRS considers your online course sales as self-employment income, meaning you’re a sole proprietor.
All Income is Taxable: Whether you receive a 1099-K or 1099-NEC (or nothing at all), you must report all your gross income.
Deductions are Your Best Friend: Track every business expense – platform fees, software, marketing, even a portion of your home internet – to lower your taxable income.
Self-Employment Tax is Real: Expect to pay Social Security and Medicare taxes (about 15.3% on your net earnings) on top of your regular income tax.
Estimated Quarterly Payments: If you expect to owe more than $1,000 in taxes, you’ll need to pay estimated taxes throughout the year to avoid penalties.

Is Your Online Course Business A “Business” To The IRS? (And Why It Matters)

Before we dive into forms and deductions, let’s tackle a fundamental question: Is your Teachable or Udemy course considered a “business” or a “hobby” by the IRS? Honestly, this is crucial because it dictates what you can deduct.

Here’s the thing: If your primary purpose for creating and selling courses is to make a profit, and you conduct your activities in a business-like manner, then it’s a business. This means you track expenses, market your courses, and generally try to grow your income. The IRS looks for factors like whether you spend time and effort on the activity, if you depend on the income, and if you have prior success in similar activities.

If it’s deemed a hobby, you can only deduct expenses up to the amount of your hobby income, and those deductions are limited. But for most of us actively selling courses, putting in the work, and trying to scale, it’s a business. And that’s fantastic, because it opens the door to a ton of tax deductions!

Tracking Your Teachable & Udemy Income: What to Expect from 1099s

This is where the rubber meets the road. How do Teachable and Udemy report your income to the IRS? And what do you do if you don’t get a form?

Understanding Form 1099-K:

Platforms like Teachable and Udemy generally process payments through third-party payment processors (like Stripe or PayPal). If you hit certain thresholds, these processors will send you (and the IRS) a Form 1099-K, Payment Card and Third Party Network Transactions.

For the 2026 tax year, the federal threshold for receiving a 1099-K is typically $20,000 in gross payments AND more than 200 transactions.
Self-correction/update: The $600 threshold was briefly implemented, then delayed. For 2026, it’s still safest to assume the $20,000/200 transactions, but be aware that legislative changes could lower this. Always check the latest IRS guidance for the specific tax year. For SideHustleCents.com, I always recommend acting as if the threshold is $1 to be safe.

Important: Even if you don’t meet these thresholds, Teachable and Udemy will often provide you with a detailed income report within your instructor dashboard. This is your source of truth.

What About 1099-NEC?

You might receive a Form 1099-NEC, Nonemployee Compensation, if you did some consulting work or other specific services for Teachable or Udemy directly (e.g., as an affiliate for their platform, but even then it’s usually 1099-K if it’s payment processing). For the average course creator, a 1099-K from the payment processor or an internal income report is more common. However, if you received direct payments for services outside of course sales (and earned $600 or more), then a 1099-NEC is what you’d get.

No 1099? You Still Report It!

Here’s the golden rule of gig economy taxes, which connects directly to understanding [The Exact Tax Forms Every Gig Worker Needs To File In 2026]: Every single dollar you earn from your online courses is taxable income, regardless of whether you receive a 1099 form. The IRS expects you to report it. Don’t fall into the trap of thinking “no form, no problem.” That’s a surefire way to get into hot water.

My Personal Tip: Download your income reports from Teachable and Udemy monthly or quarterly. Don’t wait until January 31st of the next year. Reconcile these with your bank statements. I use QuickBooks Self-Employed (worth every penny for tracking!) and link my accounts directly. This way, I always know exactly what I’ve earned.

The Golden Ticket: Deductible Business Expenses for Course Creators

This is where you save real money. As a self-employed individual, you can deduct “ordinary and necessary” business expenses. “Ordinary” means common and accepted in your industry (online course creation), and “necessary” means helpful and appropriate for your business. Trust me, there are a lot! These deductions reduce your taxable income, which means less money for Uncle Sam.

Here are some common deductions for online course creators:

Platform Fees & Subscriptions:
Teachable or Udemy’s cut of your sales.
Monthly or annual subscription fees for your Teachable plan.
Payment processing fees (Stripe, PayPal).
My take: These add up quickly, so track them diligently. They’re direct costs of doing business.
Marketing & Advertising Costs:
Facebook Ads, Google Ads, Pinterest Ads.
Email marketing software (ConvertKit, Mailchimp, ActiveCampaign).
Website hosting and domain registration fees.
Affiliate payouts (if you run your own affiliate program).
Software & Tools:
Video editing software (Adobe Premiere Pro, DaVinci Resolve).
Graphic design tools (Canva Pro, Adobe Photoshop).
Screen recording software (Camtasia, Loom).
Project management tools (Asana, Trello).
AI writing tools (Jasper, Copy.ai) for course content or marketing.
Seriously: Every subscription you pay for that directly supports your course creation or promotion is likely deductible.
Home Office Deduction (and its rules):
If you use a portion of your home exclusively and regularly for your business, you can deduct a portion of your home expenses. This includes rent/mortgage interest, utilities, homeowner’s insurance, and repairs.
Two methods:

Simplified method: Deduct $5 per square foot of home used for business, up to a maximum of 300 square feet ($1,500 maximum deduction). This is what I often use because it’s so much easier.
Regular method: Calculate the actual percentage of your home used for business and apply that percentage to your total home expenses. This requires more detailed record-keeping.

Remember: “Exclusively and regularly” is key. If your “office” is also your living room where you watch TV, it generally won’t qualify.
Professional Development & Education:
Other courses or workshops you take to improve your skills (e.g., video production, marketing, specific software).
Books, magazines, or online resources related to your niche or course creation.
Travel & Equipment:
Business-related travel (e.g., conferences, workshops).
New computer, microphone, camera, lighting, or other equipment used primarily for your course business.
Internet and phone bill (a portion, if used for business).

Pro-Tip: Keep immaculate records! Save receipts, categorize expenses, and use accounting software. This connects to how crucial tracking is for [Gig Worker Taxes Explained Step By Step For Complete Beginners].

Self-Employment Tax: The Elephant in the Room (and how to manage it)

Okay, this is the one that often surprises new gig workers. When you’re an employee, your employer withholds Social Security and Medicare taxes from your paycheck. When you’re self-employed, you’re both the employer and the employee. So, you’re responsible for paying both halves of these taxes. This is called Self-Employment Tax.

For 2026, the self-employment tax rate is 15.3% on your net earnings from self-employment (which is 92.35% of your gross self-employment income, up to certain limits for Social Security). This 15.3% breaks down into:

12.4% for Social Security (up to the annual earnings limit, which changes each year – for 2026, let’s estimate it around $170,000-$180,000)
2.9% for Medicare (no earnings limit)

Here’s the good news: You get to deduct one-half of your self-employment taxes paid from your gross income when calculating your adjusted gross income (AGI). This helps offset the cost a little.

Paying Your Dues: Estimated Taxes & Avoiding Penalties

If you expect to owe at least $1,000 in taxes for the year (this includes your income tax and self-employment tax), the IRS generally requires you to pay your taxes as you earn income, rather than waiting until April 15th next year. This means making estimated quarterly tax payments.

Seriously, don’t skip this. Penalties for underpayment can sting!

Quarterly Payment Deadlines (2026):

The IRS breaks the tax year into four payment periods. If a deadline falls on a weekend or holiday, it shifts to the next business day.

How to Calculate Your Estimated Tax:

This is where you need to project your income and expenses for the year. It sounds daunting, but it’s manageable.

Estimate your total gross income from Teachable, Udemy, and any other sources for the year.
Estimate your total business expenses for the year.
Subtract expenses from income to get your estimated net self-employment income.
Calculate your estimated self-employment tax (approx. 15.3% of your net self-employment income).
Estimate your regular income tax. This is where it connects to [How Much Of My Gig Income Will The IRS Actually Take In 2026]. You’ll need to consider your total household income, deductions (standard or itemized), and the 2026 tax brackets.
Add your estimated income tax and self-employment tax.
Divide this total by four to get your quarterly payment.

Safe Harbor Rules: To avoid underpayment penalties, you generally need to pay at least 90% of your current year’s tax liability or 100% of your previous year’s tax liability (110% if your AGI in the prior year was over $150,000).

My Personal Tip: Set aside 25-35% of every payment you receive from Teachable or Udemy immediately into a separate savings account. This acts as your “tax buffer.” Then,