When streaming on Twitch, donations are a great way to earn extra income. But are those donations taxable? It depends on the amount and how you use it. In this article, we’ll explore how donations are treated under the law and what you need to know if you’re looking to make money from donations on Twitch.
What Are Twitch Donations?
Twitch donations are a way for viewers to show their appreciation for streamers. Viewers can donate money directly to streamers, either through the Twitch website or through a third-party payment processor like PayPal or Venmo.
Donations are usually given in the form of virtual currency, which can be used to purchase special in-game items or exchanged for real money. Donations can also be used to purchase merchandise or tickets to live events.
How Are Twitch Donations Taxed?
The Internal Revenue Service (IRS) considers income from Twitch donations as taxable income. This means that you’ll need to pay taxes on any money you receive from donations.
The amount of taxes you owe will depend on the amount of money you earn from donations. You may also need to file additional paperwork if your donations exceed a certain threshold.
Taxes on Donations Under $20
If you receive donations of $20 or less, you’re not required to report them to the IRS or pay taxes on them. This applies to both cash and virtual currency donations, so if you receive a lot of small donations, you don’t need to worry about taxes.
Taxes on Donations Over $20
If you receive donations of more than $20, you’ll need to report them to the IRS and pay taxes on them. The exact amount of taxes you owe will depend on the amount of money you receive and your filing status.
You’ll also need to fill out a Schedule C form to report your income from donations and any other income you earn from streaming on Twitch.
State Taxes
In addition to federal taxes, you may also need to pay state taxes on your Twitch donations. Each state has different laws regarding taxes, so you’ll need to check with your state’s Department of Revenue to find out if you need to pay taxes on your donations.
FAQs
1. Do I have to pay taxes on Twitch donations?
Yes, you need to pay taxes on any donations you receive over $20.
2. Do I need to report donations under $20 to the IRS?
No, you don’t need to report donations of $20 or less.
3. Do I need to pay state taxes on Twitch donations?
It depends on the state. You’ll need to check with your state’s Department of Revenue to find out if you need to pay state taxes on your donations.
Conclusion
If you’re looking to make money from donations on Twitch, you’ll need to be aware of the tax implications. You’ll need to pay taxes on donations of more than $20 and may need to pay state taxes as well. Make sure to keep track of your income from donations and report it to the IRS to avoid getting into trouble with the law.
