Website Donations and the IRS

Regular Joined: Jan 24, 2008 Posts: 58

I'm posting this message on this website because I believe this site is frequented by mature, professional, and knowledge people. In addition, given this cross section of people and the fact they likely have websites of their own and accept donations here are my questions.

If your web site accepts donations at what dollar amount do you have to report it to the IRS?

When should you file your website/community/clan with the IRS?

If your only use for donations is to support the communities existance (ie., web hosting, software, site maintanance, game servers, etc...) are you a social club (ie., 501 (c)(7)?

Quick review of the 2008 tax code suggests that even 501(c)(7) with gross reciept less than $25,000 over a 3 year rolling period now need to file an e-card and have an EIN (employeer identification number).

If you have experience or expertise in this area please reply.

If you have solve/research is specific line of question because you yourself have a clan that accepts donations please reply.

Thanks raven friends Very Happy

registered · Posted: Thu Mar 13, 2008 9:28 am

I treat my site as a hobby. I report donations as money received because of a hobby. I report site hosting expenses as hobby expenses. Makes sense to me, but I am not an accountant or a tax expert. I don't bring in a lot of money in any event. Good topic, I'd love to hear what others do.

Posted: Thu Mar 13, 2008 9:38 am

Our site generates between $200 and $300 per month. This money is used to pay for: web hosting, game servers, donations to key freeware sites such as raven, for teamspeak server, for access to high quality website downloads for site improvements, and what ever else it required to keep community running and everyone happy. All money is used just for community itself

Posted: Thu Mar 13, 2008 11:10 am

LOL, I just know TurboTax asks for income received from hobbies and expenses for hobbies. That's what I do. Smile

Posted: Thu Mar 13, 2008 12:07 pm

Sorry gremmie I realize my last post could be taken as input to you for tax purposes. I posted this information to provide additional background information to set the scope for the questions posed in my original post. I suspect that my scope is very similar to most communities on the web that accept donations.

Posted: Thu Mar 13, 2008 4:57 pm

I didn't take it that way at all. I would be very surprised if any gaming clans classified themselves as a social club, or registered themselves with the IRS in any way whatsoever. Maybe the really big ones do that are into it for a profit (league ladders, etc).

registered · Posted: Fri Mar 14, 2008 6:00 am

loraxx, it would be best to find a good tax accountant/lawyer to go through the pros/cons of incorporating (even if its for non-profit status), or sole proprietorship or hobby or ????.

Posted: Fri Mar 14, 2008 11:20 am

montego,

I was starting to get to the recommendation you made. Thanks for recommendation.

Posted: Fri Mar 14, 2008 3:54 pm

Well I know some folks who have changed the registration data for their domain to a UK postal address and then claim they live in the UK. UK tax law is a little backward and they have not yet figured out that you can earn an income from the internet.
I'm not in any way condoning such dishonest shenanigans....