

Ask HN: Pay tax on donations? - jo

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?
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_delirium
(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.

~~~
jo
Thank you. Great points, and gives me a good starting point.

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cperciva
In 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.

