Sites that accept donations, do we pay taxes on them?

There are millions of sites on the internet that ask for donations to help float the bill for whatever reason your site needs it for (bandwidth, dedicated servers, server management, etc) through paypal.

I would think not, as it is a donation, and what about when paypal takes out a %, +35 cents or whatever out of every transaction? Would we get taxes from that as well? I am sure a lot of you have websites that probably accept donations, and hopefully you could give me some insight on this.

 

Well it depends on the country you're paying taxes to and the rules that apply there.

 

USA, sorry. Anyways, just wondering if we are supposed to pay taxes or what. I know DP has taken donations, as well as hundreds of thousands of other sites.

 

Technically yes you should as it is income, but you can write off the paypal fees etc. and if you spend it on upgrading your site you can write that off as well.

 

In other words, yes, it's taxable, or at least donations account for taxes, I suppose. Whether you'll end up paying taxes depends on your personal situation.

It's always impossible to give a clear cut answer to such questions, and advice from a professional is needed.

Of course it wasn't wrong for you to ask, after all someone could have known for sure that no taxes are due for donations. Unfortunately it's never that simple.

Sorry, I too wish it was easier, instead we all need a pro at the end of the day or can only speculate.

 

Hmmm... my first thought was to say yes, but then gifts are tax free... I am not sure a donation counts as a gift. Interesting question.

You can deduct the paypal fees, and probably other expenses against it (hosting /domain costs). This is all IMO, not researched it specifically yet.

 

Calling it a donation does not make it tax free unless you're a registed NPO with a 501(3)c declaration.

As far as calling it a "gift" - that might preclude the taxable issue.

Further, you could not write off the PayPal fees as a tax deduction unless you were claiming the income (donation/gift) to begin I'd think.

 

Yes, that is true I would say also. Sorry if it seemed I implied otherwise.

 

I believe it is noted as a 'gift', for donations only though.

 

"Gifts" and "donations" are technically different.

Donations are from visitors and must be declared as income.

You don't want to have gifts...If the IRS audits you, you will most likely have to pay taxes on your "gifts".

Go down and talk to an accountant to be sure...most will give you a free visit.