Minecraft Server Donations Legal Concerns

I host a Minecraft server on my computer. And I am wondering if it would be illegal if I had people pay for ranks and perks using real money. I would make a terms and agreement and make sure that they read it before paying. I live in the U.S in the state of California.

 

doesnt matter what country or state you live in, laws on the internet come into play.

you would be best to ask the bukkit dev's and meybe mojang/notch.

to my understanding it is not illegal to give people the option to donate, as for actually charging people for perks and whatnot, my guess is that it is a gray area, like i said, id ask bukkit dev or mojang/notch.

 

You can "Charge" people for perks as that would be selling the perks that is illegal (Usually)
However you can "Reward" your donators and get around that.
Loop Hole FTW

 

You'll have to pay taxes for your donations. You can avoid taxes if you can proof that you're a non-profit organisation but you need a license for that. In most countries, when your income reaches a certain level you'll have to pay taxes on all of that money. PayPal often checks accounts for this. They will suspend your account if they notice you're not paying your taxes. I've heard this from many server owners.

 

But can I call it "donations" if I host my server and in no way have to pay for it.

 

Ivan is correct. Tax does have to be paid on your income even if it's down as a donation. You should check out your countries tax laws and comply with them to be safe.

 

I've been receiving donations for two years and I never heard of such thing. What am I supposed to do, write a check worth 10% of my monthly donations and mail it to the IRS? Ridiculous.

 

No. You're supposed to comply with your countries tax laws. How is that so "ridiculous" for you to understand?

 

No, if you're a US citizen, you're supposed to report it on Form 1040, Schedules C and SE. If the amounts are high enough, you should also make quarterly estimated payments or increase the witholding on your other income to avoid being under-witheld.

You may also owe state and/or local income taxes.

 

If this is true, and you make alot of money through donations, you'll have to watch out you don't get in trouble. The fees for hiding amounts of money to your government are often fairly high. And if you're under the age of 18 your parents will have to pay for that.

 

You gotta be joking. I have no idea how to do that. It's not like I keep the money for myself anyways. How many server owners actually do all of this? And for what reason?

I've only had to deal with taxes when they're automatic, like out of my paycheck or buying from an eBay seller in the same state. Other than that it's stupid to expect people to fill forms and shit. Oh well, I guess I'll be fine until the IRS comes knocking on my door.

 

Well am I glad noone gives me donations for my plugins... not!

 

wait so they now TAX DONATIONS?
wtf...

 

You have taxes withheld from your paycheck, but you don't file a tax return at the end of the year? How do you know you weren't over-withheld and are due a refund?

Anyway, if your donations are less than $600/year, I wouldn't worry about it. The IRS has bigger fish to fry.

If you receive money and provide nothing in return, it's a gift and is non-taxable (if it's less than $13,000).

If you receive money and provide something in return (like a perk or rank), then it's income and is taxable. It may even be considered self-employment income, in which case you also owe Social Security and Medicare taxes.

EDIT by Moderator: merged posts, please use the edit button instead of double posting.

 

Source?

 

<rolls eyes>
http://www.irs.gov/publications/p950/ar02.html#en_US_publink100099451

 

Why roll your eyes? I'm sure chaseoes (Hi chase!) was just wanting to make sure that the information you had given was true. As most would know, sometimes people make fake articles and make up facts on certain things (not saying you are) so it's always best to be certain the information is correct.

Thanks.

 

Because he could have confirmed the information himself in about 10 seconds with Google.

 

Why should I pay TAX on something that is not a business, I don't earn money I simply just pay the bills of the server. Is this a U.K law ?

 

This is US law.

 

Please don't end up getting in an argument I just simply want an answer. And this isn't like a normal server with server bills I host it for free on my computer. Note that fact.

 

Bellablue2 ,

You still pay electricity, internet bill.
I honestly wouldn't worry about it unless your bringing in over a grand a month.

 

Yeah, That is very true and my cpu runs on a huge load of electricity. But, really? I'm fine unless I'm over $1,000 a month?

 

Bellablue2 , that would be my thoughts.
Honestly, if you are worried about it that much, i'd go and talk to a Tax Expert

 

As I said before, if your donations are less than $600/year, I wouldn't worry about it.

 

I payed taxes this past year from all the money that I made from my server, cause I have parents that worry too much about this stuff Guess that's a good thing

 

sillyrosster How old are you... I would have my parents working with me too. I'm 13.

 

I'm 17.

 

I personally find this PATHETIC! Silly and stupid! Why should you have to pay the IRS X% of your income?
I play on VERY popular servers that get A LOT of donations, and I never see their income being deducted. Also sometimes with PayPal your payment from the other person is discounted, I think this is from taxes, not sure why. One thing's fore sure THIS IS RIDICULOUS!

 

Um, unless you're a registered non-profit and your "donations" amount to a certain limit, you are required to pay taxes. You guys may not realize it, but accepting money in exchange for perks (even if its labeled a donation) becomes income at a certain level. If your excuse for not wanting to pay taxes is because you don't believe in it or don't know how to do it, you shouldn't be running a server and/or accepting payment. Grow up.

On the other hand, I can think of one way of getting around it (and I'm not talking about labeling the payments as donations). However, if you're going to try and get around the law, you can figure that out.

EDIT: Also, if you start making so much money and the tax becomes ridiculous, you can form an LLC (at least in CA). Taxes could end up being a lot less, you'll have a registered company to your name, and limited liability.