(July 21, 2016 at 3:22 am)Aractus Wrote: Why is there "tax" to pay on top of expenses?
(July 21, 2016 at 3:55 am)SteelCurtain Wrote: Because Patreon is used for payment for services rendered. So it is income. Tibs will have to pay tax on the patreon income. We are calling them donations, but we are sort of bastardizing the way Patreon is supposed to be used.
Basically what SC said. If people donate via PayPal to me directly, it doesn't get taxed, because it's a donation. However with Patreon I am basically saying "I will provide service X if you pay a subscription fee", so now that's a business as far as the IRS are concerned. It counts as self-employed income, which is taxed at roughly 30%. Now the complicated part is that I *might* be able to claim hosting costs as expenses that are tax deductible, but I won't really know until I speak to my tax professional next year.
