I'm an individual and not a part of any nonprofit organization. What, if any, tax implications are there for donationware in the US (as a recipient of funds)? The product would be software and/or screencasts.
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The wiki entry for donationware doesn't address the tax issue. Good history, and example of the process.– JTP - Apologise to Monica ♦May 17, 2012 at 0:33
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1 Answer
If you're not a recognized non-profit organization then your income is taxable as earned income, or hobby income, depending on the circumstances. Some would say it may be classified as a "gift", but I would argue that to be a dangerous proposition, and would advise against it.
answered May 16, 2012 at 22:17
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But, they'd be wrong. Max may be a nice guy, but I don't know him (i.e. we are not friends). Since there's a product involved, even if the payment is optional, it's taxable. The flip side is it would be really interesting if every business decided to "pay what you wish, if you wish" and then claim no income. May 16, 2012 at 22:59
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3@JoeTaxpayer that's why I said I would advise against it, because that would be wrong:) But haven't you heard of "tax advisors" who get paid to tell the customers what the customers want to hear? I'm sure you have... They call you later to help with audits... May 16, 2012 at 23:08
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3I +1 you, and backed up your answer. My opinion is such advisors should lose their credentials, and serve jail time. The tax code is tough enough without these folk. May 16, 2012 at 23:22
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Would there be any tax implications for someone who asked others to give money to a non-profit organization that wasn't a charity, to perform some task from which he would expect to receive some benefit, but hardly exclusively (e.g. planting trees in a public area near his house)?– supercatNov 16 at 19:34