My husband started an online business selling stickers designed by our minor daughters. We just recently opened this month and we are not expecting to make much profits yet especially when we consider the expenses we just incurred in purchasing printer, cutter, and various supplies to get the business started. The shop is set up at Ko-Fi.com with payments going through PayPal. My questions are:
1. Do we need to file quarterly tax if we are not making any profits yet after deducting the initial set up costs? Are quarterly taxes filed for both federal and state? Does Turbo tax helps with this quarterly filing?
2. Are donations via ko-fi website taxable?
3. Should I be expecting 1099 issued from Ko-Fi or from PayPal?
1. You would make estimated payments if you expect your tax due to be greater than $1,000 and you did not pay an amount equal to your last tax liability.
2. Both federal and state require estimated tax payments if required.
3. Donations to a recognized charity are deductible if you have an acknowledgment or proof of payment and you itemize.
Thank you for your answers. Perhaps I wasn't clear about the donations. It is not that we are making donations but that we are receiving donations from people who are supporting our shop. So is donations received (not given) taxable?
Also how about the 1099? Should I be expecting it from Ko-Fi or from PayPal?
The money received by you, if I understand correctly, is a gift. You give them nothing in return. In that case the money is not taxed.
Whether you receive a form depends on the amount of payment you get over the year.