Declaring donations as a streamer

[emdoll27]

This is my first year making enough as a streamer to have to declare it on my taxes ( donations, embers, streamloots, etc)
So I understand how to declare them, but I am curious how I pay in what I need to. Since paypal isn't taking taxes out for them, I have to still pay those taxes, right? Is there anything more I need to do?

[BillM223]

Yes, you still need to pay taxes during the year as your revenue comes in.

You use the form 1040-ES to make the payments.

You pay more or less quarterly (but the IRS has a funny idea of what those dates are, so read the instructions at that link).

More or less, you need to have paid the tax for the year by January 15 of the next year. You may want to create a test return to make a guesstimate on how much your taxes will be. 

It will be easier after the first year.

[Opus 17]

Very broadly speaking:

You owe income tax and self-employment tax on your net income, which is gross income minus legitimate expenses.

You are required to keep accurate business records of your income and expenses, regardless of whether or not you get tax reporting forms for your income.

You don't get a business deduction or personal tax deduction for "donations" of your time.  You can only deduct donations of money you actually pay to someone, and only if that money came from your taxable income in some way.  However, items donated to you in reward for your business activities are included in your taxable income according to their fair market value (what they are worth or what you could sell them for).  

@VolvoGirl used to have a collection of helpful links for new small business owners.  Are you still around?

[emdoll27]

I should have worded my question better. So 2019 I made just under 4k worth of donations, which I assume I have to pay in for. We already did our taxes for 2019, wrote in all I made for it under self employed, and filed with turbo tax. Did I make a mistake by not sending in money sooner? Are they able to automatically take it out of my refund since I filled in the all the info or do I need to send in money?


Thank you so much for answering

[Opus 17]

I don't understand your terminology.

"I made just under 4k worth of donations".  People paid you for streaming?  This is not donations, no matter what the platform calls it.  This is taxable income to you, earned in return for working or providing a service.

"wrote in all I made for it under self employed".  Did you report the $4k of income as self-employment income on a schedule C that was attached as part of your tax return (or your joint return with a spouse)?  That's what you are supposed to do.  If you reported your income, then the tax you owed was already calculated and included in your overall refund or tax due.  Print a copy of your return and review it carefully, paying special attention to schedule C and schedule SE (which calculate your business profits and taxes, and which number then flow to your main tax return).

If you reported this income, what is your question now?

[emdoll27]

Yes, people give tips, but a lot of people word it as donations.
Which I understand is taxable.

Yes we reported it all on our joint return. I guess I just wasn't certain if it got calculated automatically on turbo tax and taken out of our refund, or if I had more to do than that. 

Thank you so much for all of your help!

[Opus 17]

Unless you want to incorporate as an LLC or S- or C-corporation (and don't do that without legal advice), your self-employment income is included and wrapped up in your one personal tax return, with the business activities on schedule C. A tax return is really just a simple math problem of addition and subtraction, you should be able to follow it if you print it out.  (The rules about what to add and subtract can get complicated, but once the numbers are on paper, you should be able to follow it.)

Cheers.

[VolvoGirl · Accepted solution]

Yeah I'm still here.

Some general info on self employment...........

You will need to keep good records.  You may get a 1099Misc at the end of the year if someone pays you more than $600 but you need to report all your income no matter how small.  You might want to use Quicken or QuickBooks to keep track of your income and expenses.

There is also QuickBooks Self Employment bundle you can check out which includes one Turbo Tax Online Self Employed  return....

http://quickbooks.intuit.com/self-employed

When you are self employed you are in business for yourself and the person or company that pays you is your customer or client.

To report your self employment income you will fill out schedule C in your personal 1040 tax return and pay SE self employment Tax.  You will need to use the Online Self Employed version or any Desktop program but the Desktop Home & Business version will have the most help.

FOR 2019

Self Employment tax (Scheduled SE) is automatically generated if a person has $400 or more of net profit from self-employment.  You pay 15.3% SE tax on 92.35% of your Net Profit greater than $400.  The 15.3% self employed SE Tax is to pay both the employer part and employee part of Social Security and Medicare.  So you get social security credit for it when you retire.  

The SE tax is already included in your tax due or reduced your refund.  It is on the 1040 Schedule 2 line 4 which goes to 1040 line 15.  The SE tax is in addition to your regular income tax on the net profit.  You do get to take off the 50% ER portion of the SE tax as an adjustment on 1040 Schedule 1 line 14 which flows to 1040 line 8a.  Turbo Tax automatically calculates the SE Tax and Adjustment.

For 2019 Schedule C Net Profit or Loss now goes to 1040 Schedule 1 line 3.  Then the total on schedule 1 line 9 goes to 1040 line 7a.

Here is some IRS reading material……

IRS information on Self Employment

http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Self-Employed-Individuals-Tax-Center

Pulication 334, Tax Guide for Small Business

http://www.irs.gov/pub/irs-pdf/p334.pdf

Publication 535 Business Expenses

http://www.irs.gov/pub/irs-pdf/p535.pdf

[emdoll27]

Wonderful, thank you so much!