Collecting donations on a website

[Agent Smith]

What is the name of your state (only U.S. law)? Colorado. Server is in Chicago and CloudFlare is used to propagate all around the world.

I run a basic computer forum and I have always been of the opinion that ADs suck and I would just allow donations. So I have a link to donate to the site through PayPal or Bitcoin. Now I'm not a LLC or a 501(c)(3) and I can't do anything about tax deductions or anything like that. It's just a site I built myself.

Are there any ramifications about collecting donations? Do I need to be a 501(c)(3) or a LLC or something? Should I mention that all donations are not tax deductible? I read in PayPal's verbiage about making more than $10,000 or something it would have to be reported to the IRS.

Thanks for your time.

 

[adjusterjack]

Are there any ramifications about collecting donations? Do I need to be a 501(c)(3) or a LLC or something?

You wouldn't qualify as a 501(c)(3) and having an LLC isn't likely to shield you from lawsuits addressing your personal acts.

Should I mention that all donations are not tax deductible?

Yes.

I read in PayPal's verbiage about making more than $10,000 or something it would have to be reported to the IRS.

Unless you qualify at tax-exempt, non profit with the IRS then ALL of your income from "donations" is taxable.

I suggest you go by what the IRS says, rather than PayPal. You can learn all you need at the IRS website:

https://www.irs.gov/businesses/small-businesses-self-employed

 

[Zigner]

The $10k has to do with what PayPal reports...it has nothing to do with reporting your own income.

 

[quincy]

What is the name of your state (only U.S. law)? Colorado. Server is in Chicago and CloudFlare is used to propagate all around the world.

I run a basic computer forum and I have always been of the opinion that ADs suck and I would just allow donations. So I have a link to donate to the site through PayPal or Bitcoin. Now I'm not a LLC or a 501(c)(3) and I can't do anything about tax deductions or anything like that. It's just a site I built myself.

Are there any ramifications about collecting donations? Do I need to be a 501(c)(3) or a LLC or something? Should I mention that all donations are not tax deductible? I read in PayPal's verbiage about making more than $10,000 or something it would have to be reported to the IRS. ...

If you are simply asking for donations to meet your website's operating costs, you should not be required to register with your state but, as said earlier, you will be responsible for paying taxes on the donations you collect. The donations will be considered income to you.

I think you would benefit from sitting down with a legal professional in your area prior to soliciting donations on your website.

Here is a link to "Colorado Legal Services and Organizations" from the Colorado Law Project, Sturm College of Law, where you can find some legal assistance: http://www.law.du.edu/index.php/the-colorado-law-project/colorado-legal-services-and-organizations

 

[Agent Smith]

you should not be required to register with your state but, as said earlier, you will be responsible for paying taxes on the donations you collect. The donations will be considered income to you.

That is if It's over 10k from PayPal, correct? Or does it not matter? What about Bitcoin donations? I should add a variable here and that is I'm currently on SSI so that could be a major factor. As of now I've haven't gotten one donation, but I just want to make sure I'm in the clear here legally.

I think you would benefit from sitting down with a legal professional in your area prior to soliciting donations on your website.

I think I'll do just that. I live in Loveland,CO. Would there be any free counseling available or is this something that's gonna cost me an arm and a leg?

Thank you all for your responses.

 

[FlyingRon]

That is if It's over 10k from PayPal, correct? Or does it not matter?

Every cent of income you receive is taxable. Of course, if this is a business, you can deduct your business expenses (cost of hosting the website, etc...) off the top.
However, what remains is still taxable (both income and self employment taxes).

What about Bitcoin donations?

Doesn't matter if it's cash, bitcoins, gold bullion, or sheep they are paying you with. Everything has an equivalent value in US dollars and that is what you are taxed on.

I should add a variable here and that is I'm currently on SSI so that could be a major factor. As of now I've haven't gotten one donation, but I just want to make sure I'm in the clear here legally.

That's yet another issue. Yes, any "donations" are going to affect SSI asset/income levels as well.

 

[adjusterjack]

I'm currently on SSI so that could be a major factor.

Yes, it would be.

You can find out just how major by going to the SSA website and studying up.

https://www.ssa.gov/ssi/

 

[quincy]

That is if It's over 10k from PayPal, correct? Or does it not matter? What about Bitcoin donations? I should add a variable here and that is I'm currently on SSI so that could be a major factor. As of now I've haven't gotten one donation, but I just want to make sure I'm in the clear here legally.

I agree with FlyingRon that, depending on the amount of money you collect in donations, you could find your SSI payments affected. It is possible, however, that you will not make enough money from your website to have this a concern.

I think I'll do just that. I live in Loveland,CO. Would there be any free counseling available or is this something that's gonna cost me an arm and a leg? ...

You can check the site I provided earlier to see what sort of free or low cost legal assistance is available to you in Larimer County. Loveland is a large city and both Fort Collins and Denver are close by so there should be a legal aid clinic within a short drive. Many attorneys will work out payment plans for low-income clients but I doubt if a personal review of your website plans will cost you "an arm and a leg."

Good luck.

 

[Agent Smith]

Okay, thanks all.

 

[quincy]

Okay, thanks all.

Thank you for the thanks, Agent Smith. We all appreciate them. Good luck.