I am a Twitch Streamer myself and someone that does their own taxes. The key thing here is the word "donations"and "networking costs". "donation" is used by users of the web site when directly sending money to the streamer by various means.
The term "donation" here is not correct because no income gained either from twitch or indirectly through activities on twitch are "donations". Donations are by a means that is unsolicited in nature, but streamers do this with the intent of making a career out of it.
Next we get into the hairy situation and it really comes down to the fact the U.S. Government has not defined Twitch Streaming as an enterprise with a business code. Thus, we do not have a set of guidelines to follow.
"Networking costs" are not a line item so maybe they were meaning "Advertising Expense"
Bits: They can be used to advertise your channel. "How are bits considered advertisement"? well simple. Bits provide you with a placement of your channel on there channel (Just like a billboard) This is done through the streamers overlays, Twitch bit leader board and the Twitch chat feed.
Subs: The payment of 5 dollars a month is tricky because in some cases its just like advertising. Its a means to get your name out there to the creator to get on there radar (A streamers equivalent to a business card). Streamers do this to promote their channel to a bigger creator in hopes that in the long run they will get promotions VIA raids, hosts, shout outs, ect. Not to mention it puts you in a good position with their community which can benefit you long term much more.
Direct Paypal Payment: This is dependent on the reason for sending money. Example: A streamer does a creative stream and are selling something that you can put on your wall behind you while you stream. This would be considered office decor. But, if this is just direct payment to bypass the twitch benefits listed above then its nondeductible.
These are just my interpretations of tax law with the inner knowledge of the streaming ecosystem. Burden of proof is on the individual so if you can prove it was ordinary and necessary you'll be fine.
Hopefully it helps.
twith.tv/codykoko
