Is Patreon money taxable? Before reading any further, be advised that this article is NOT tax advice, nor should it be construed as such. Consider this some basic information that is meant to help you ask the right questions of a tax professional or help you in your own research of official IRS publications that address the issue or the state equivalent of such taxation resources.
What Is Patreon?
Patreon is a crowdfunding platform. The official site says that using Patreon makes it “easy to get paid” and there are literally hundreds and thousands of artists, patrons, fans, and followers using this resource to buy, sell, and support creative endeavors. Some use Patreon to fund their new creative projects, others use it for awareness-raising and branding, and still others are there to provide a gateway to pre-order physical or electronic media in anticipation of pre-order season, Black Friday, etc.
Is Patreon Money Taxable?
If you raise money on Patreon, it’s safest to assume that 100% of those funds are taxable. Patreon does NOT withhold taxes from users’ earnings. This is the responsibility of the user to track, manage, and report all earnings subject to state or federal taxes.
Patreon may or may not (depending on the jurisdiction) handle sales taxes, value-added taxes or VAT, etc. You will need to research Patreon’s terms of service based on the laws that may be applicable to you in your state.
Some Patreon transactions are for non-profit organizations and what users must know in such cases is that there is still no across-the-board, hard-and-fast rules about taxable income in such cases. You may need to consult a legal expert or tax advisor about the status of taxation with respect to 503(C) charities or other entities.
Taxable Patreon Funds And Tax Reporting
Patreon supplies tax paperwork as required by law but know that based on the platform’s terms of service, those who did not earn up to the state threshold (from $600 or more all the way up to $20K or more depending on location) do NOT get a 1099-K or other tax forms. You will be responsible for tracking and managing your taxable income regardless of whether you are authorized to receive a 1099-K.
Are Patreon Payments Tax Deductible?
You will need to consult a tax professional in this area, but in general, those who donate or support an artist via Patreon must have gotten nothing of value in return for their financial support in order to be considered tax-deductible in a general way. If you supported an artist on Patreon and got something in return for your donation or patronage, you may technically qualify for a tax deduction minus the actual dollar value of what you got in return. But much will depend on current state and federal tax laws, which are subject to change every single year.