I have an LLC, just me - considering accepting donations on my website. Will talk to a CPA at some point, but in general will I need to report and pay taxes on donations to a web app?
Ask HN: Pay tax on donations?
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Re: Ask HN: Pay tax on donations?
#2(Disclaimer: researched it myself due to it impacting me, but I'm not a lawyer or CPA.)
The short answer is: I think you probably do have to report them as income.
If it's a donation to the LLC, I don't think there's any way around it; if you're running a business and people are giving that business money, it's income.
If it's a donation to you, personally, you could argue it's a personal gift, not income. But that's sort of gray area. If, say, you had cancer, and were asking people to send money to pay for your treatment, you could plausibly argue that those are gifts. But if it's a donation button on a web-app that provides a service, it looks a lot more like a "tip jar", which would make it as taxable as an IRL tip jar is.
Re: Ask HN: Pay tax on donations?
#3In Canada this largely comes down to a question of intent. If you set up your website with the intention of making money from donations, the income is taxable. If you set up your website because you wanted to tell the world how fantastic your cat is, it's not taxable income. The same rule -- "are you doing this with the intention of making money" -- applies in deciding if expenses are tax-deductable.
Of course, I am not a tax lawyer, and the laws in the USA are probably different from the laws in Canada -- but I'd still guess that you'll probably have to pay tax.
Re: Ask HN: Pay tax on donations?
#4(Disclaimer: researched it myself due to it impacting me, but I'm not a lawyer or CPA.) The short answer is: I think you probably do have to report them as income. If it's a donation to the LLC , I don't think there's any way around it; if you're running a business and people are giving that business money, it's income. If it's a donation to you, personally , you could argue it's a personal gift, not income. But that…
Thank you. Great points, and gives me a good starting point.