Timeline for Every month I make money from Patreon. I want to split my income with a partner. How do I avoid paying taxes on 100% of the income?
Current License: CC BY-SA 4.0
16 events
| when toggle format | what | by | license | comment | |
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| Sep 5, 2020 at 15:46 | comment | added | Harper - Reinstate Monica | @BenMiller Proprietorships and partnerships are default structures you fall into if you don't set up something else. If your activities look, walk and quack like either one, you're in 'em. They're talking 50/50, and that makes that look like a partnership. And you're right, without paper, this turns into a whole lot of arguing. | |
| Sep 5, 2020 at 5:19 | comment | added | Ben Miller | I’m not an expert on this, but the caveat I will offer to this answer is this: You say that they already have created a partnership automatically, but my understanding is that this is only true if that is what they have agreed upon. If, instead, they have agreed that @CluelessInvestor will collect the money from Patreon and give some of it to the “partner” for the art services, this is not necessarily forming a partnership. This arrangement can be whatever these two want it to be, and the best arrangements are in writing and with the advice of professionals. | |
| Sep 4, 2020 at 18:56 | comment | added | Clueless Investor | @Nobody My artist agreed to do that, but I don't know how to do it. How do I say "nevermind, we are not partners."? it's probably important to note that I haven't paid her yet | |
| Sep 4, 2020 at 10:10 | comment | added | stanri | Also another downside of a partnership (I am in one too) is if one of the partners passes away, the entire partnership account and all of the assets get frozen and becomes (in part) part of the estate. So the existing partner cannot access those funds until the estate is wrapped up. So I highly advise getting advice from a professional regarding if a partnership/something else is appropriate for your situation. | |
| Sep 4, 2020 at 7:52 | comment | added | Nobody | @CluelessInvestor Please note that while you probably do have a General Partnership right now based on how you phrased it, you can have a simple vendor-customer relationship with the artist, and especially if you want to stay anonymous that would probably be easier. That way you would be the "boss", kind of, as in that you would be the sole owner of the video game (single person) "company", but you could still decide to give the video game art company (i.e. your online artist friend) that you contracted all the artistic freedom you want. | |
| Sep 3, 2020 at 23:33 | comment | added | Clueless Investor | I have a follow-up question I created here: money.stackexchange.com/questions/130581/… | |
| Sep 3, 2020 at 21:30 | vote | accept | Clueless Investor | ||
| Sep 3, 2020 at 20:08 | comment | added | Harper - Reinstate Monica | @Nobody good point, edited. | |
| Sep 3, 2020 at 20:07 | comment | added | Harper - Reinstate Monica | @Robert Agreed, done. | |
| Sep 3, 2020 at 20:03 | history | edited | Harper - Reinstate Monica | CC BY-SA 4.0 |
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| Sep 3, 2020 at 19:36 | comment | added | Nobody | Now we have already seen the limits of how well my business trivia knowledge transfers to the USA, but if a General Partnership is anything like its European counterparts you might want to point out more explicitly that there are good reasons the OP (and the artist) might not want to be one: All partners are individually liable for the full amount of any debt the partnership accumulates, so for example if the partnership and OP accumulates debt the debt collectors might go after the artist for all of the money, even if it's mainly OP's fault. Or the other way around. | |
| Sep 3, 2020 at 19:17 | comment | added | Robert | @Harper-ReinstateMonica Would you consider an edit to make it clear that OP will have to file that form as a consequence of having a partnership? Also please double-check your link to pub. 525 - it currently links to 535 and I'm sure if that's the one you want either. | |
| Sep 3, 2020 at 14:32 | comment | added | Harper - Reinstate Monica | Off its Form 1065 @Robert. | |
| Sep 3, 2020 at 13:09 | comment | added | Grade 'Eh' Bacon | This is the correct answer - OP has already described that they are in a partnership relationship, and tax filings should reflect that. If OP wants the tax impact to be different, they should consider how to make that new form legally effective, rather than just filing taxes however they feel suits them. Many dangers in misaligning tax filing status from legal reality. | |
| Sep 3, 2020 at 7:00 | comment | added | Robert | How will the IRS see you have a partnership with another person? | |
| Sep 3, 2020 at 6:19 | history | answered | Harper - Reinstate Monica | CC BY-SA 4.0 |