I'm a college student looking for a way to make money. Hosting a minecraft server came to mind as a way to make money as one can make plenty of money whilst having fun. By profit, I mean that most of the profit will go to improving the server, but some of it will go into my pocket. When I proposed this idea to a friend, they shot it down with legal issues that may arise, specifically with taxes.
From what I understand, a donation (in a tax perspective) is considered a gift and should be listed somewhere in taxes. I'm 17, I have no idea what I'm doing, I'm still a dependent and will be for the next four years and I don't want to get into any legal trouble before I even step out onto the real world.
Here is an example: I rent a dedicated server for $30/month and in the first month I make $100 from donations. I upgrade my plan to a better server for $40/month and pay for the next two months. I have $20 left. Is it legal to use the $20 to go out and buy 6 boxes of cereal to feed myself? Will the answer still apply if the profit was much greater, say, $500? $1000?
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Another question I have is about Paypal. My current account is Premier and unverified. My sending limits were lifted and I'm able to receive money because I linked my debit card. Even though these limits have been lifted, am I still required to, or is it recommended that I, upgrade to a personal or business account to legally profit? Are there any particular benefits to one account over another that would be applicable to my situation?
This is something you should approach someone with more experience about, majority of those who visit these forums have about as much idea of the answer as you.
I do believe that you will have to list the server donations in taxes if it is above a certain amount. This amount depends on your age and country of residence.
I do believe that you will have to list the server donations in taxes if it is above a certain amount. This amount depends on your age and country of residence.
Would you know where I should start looking to find this information?
If you are 17 years old you should not have to file tax returns anyway unless you have a actual job.
As for the legality of taking a donation... a donation is just that! a donation..
Donations are funds usually given without an item in return.. you are not technically selling the user anything.
You cannot get in trouble for using funds from a server to get other things, hell if you wanted too and i don't recommend it you could take the entire 100 dollars and run off and nobody can do anything... ( They can paypal dispute though, these happen sometimes)
But in the end, even were it against somebodies rules nobody can/will stop it.
It is taxable money, but that only applies if your monetary intake passes a certain amount (which is at least a couple thousand if I remember correctly). Bottom line is that it is legal to take donations for profit. It is a good idea to link your paypal to a bank account, otherwise they might freeze your account after multiple transactions. This hasn't happened to me yet, but it is a common occurrence.
Yeah you definitely won't have to worry about legal issues and taxes with running a Minecraft server. However, it is a bad idea to start a server with the idea that you're going to make profit off of it. Very few servers make enough money from donations to be able to pocket a substantial amount of money, yet still be able to pay for server maintenance and expansion. Also, just letting you know that you aren't going to be able to find a legit dedicated server host selling dedicated servers for $30 per month. If you plan on getting a dedicated server, prepare to be forking out at least $50-100 per month.
Yeah you definitely won't have to worry about legal issues and taxes with running a Minecraft server. However, it is a bad idea to start a server with the idea that you're going to make profit off of it. Very few servers make enough money from donations to be able to pocket a substantial amount of money, yet still be able to pay for server maintenance and expansion. Also, just letting you know that you aren't going to be able to find a legit dedicated server host selling dedicated servers for $30 per month. If you plan on getting a dedicated server, prepare to be forking out at least $50-100 per month.
He probably means that he wants to rent from a shared host.
It is taxable money, but that only applies if your monetary intake passes a certain amount (which is at least a couple thousand if I remember correctly). Bottom line is that it is legal to take donations for profit. It is a good idea to link your paypal to a bank account, otherwise they might freeze your account after multiple transactions. This hasn't happened to me yet, but it is a common occurrence.
Would they be freezing the account because I need a different account type to receive more payments?
I would be careful about approaching this. I would fork off most of the money to the server and in a few months(say 6 months) you can start pocketing some of the money to yourself. As long as it's under $2577.54 US currency, you will be able to continue well.
For future reference, if you are based in the US, Paypal will shut you down after 200 payments or 20,000 dollars revenue if you do not have a registered business. At that point, they will send you and the US. Government a 1099 stating that you made X amount of money. If you are not in a legal position at that point, I'd say the IRS would drop by and have a few words with you.
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"A programmer is just a tool which converts caffeine into code"
Taking donations for a running a server is in itself not illegal, but other things come int play. Who is hosting the server? If you are paying for hosting, then that is a non-issue, but if you are using your home connection, technically that is illegal without the permission of whoever is paying for it. If you are running it from something like a dorm room through a campus connection or business connection, then yes, that is totally illegal. Also baring in mind that running a server of any kind is sometimes grounds for termination of your connection from your ISP when running from home. Home connections are for home use, just as you cant legally use something like Windows 7 Home in a business, because of licensing issues. ISPs tend to look down upon home based servers that draw a lot of traffic, which you will have if you want to make money from this.
So basically the only (mostly) foolproof way to avoid legality issues of accepting donations is by renting a server that can handle your userbase. There is still an issue of taxes depending on how much you actually get from donations (In total, not just what you pocket).
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Cast aside your festive doylaks: dragon stuff is about to happen.
Multiplayer is lonely once you understand how it actually works.
I'm a college student looking for a way to make money. Hosting a minecraft server came to mind as a way to make money as one can make plenty of money whilst having fun. By profit, I mean that most of the profit will go to improving the server, but some of it will go into my pocket. When I proposed this idea to a friend, they shot it down with legal issues that may arise, specifically with taxes.
From what I understand, a donation (in a tax perspective) is considered a gift and should be listed somewhere in taxes. I'm 17, I have no idea what I'm doing, I'm still a dependent and will be for the next four years and I don't want to get into any legal trouble before I even step out onto the real world.
Here is an example: I rent a dedicated server for $30/month and in the first month I make $100 from donations. I upgrade my plan to a better server for $40/month and pay for the next two months. I have $20 left. Is it legal to use the $20 to go out and buy 6 boxes of cereal to feed myself? Will the answer still apply if the profit was much greater, say, $500? $1000?
2
Another question I have is about Paypal. My current account is Premier and unverified. My sending limits were lifted and I'm able to receive money because I linked my debit card. Even though these limits have been lifted, am I still required to, or is it recommended that I, upgrade to a personal or business account to legally profit? Are there any particular benefits to one account over another that would be applicable to my situation?
Thank you all in advance.
I do believe that you will have to list the server donations in taxes if it is above a certain amount. This amount depends on your age and country of residence.
Servers Sectional Moderator | Global Rules | Server Rules
Would you know where I should start looking to find this information?
As for the legality of taking a donation... a donation is just that! a donation..
Donations are funds usually given without an item in return.. you are not technically selling the user anything.
You cannot get in trouble for using funds from a server to get other things, hell if you wanted too and i don't recommend it you could take the entire 100 dollars and run off and nobody can do anything... ( They can paypal dispute though, these happen sometimes)
But in the end, even were it against somebodies rules nobody can/will stop it.
He probably means that he wants to rent from a shared host.
Would they be freezing the account because I need a different account type to receive more payments?
As long as you don't go above $10,000 a month you'll be fine.
I usually ask questions, not answer them.
So basically the only (mostly) foolproof way to avoid legality issues of accepting donations is by renting a server that can handle your userbase. There is still an issue of taxes depending on how much you actually get from donations (In total, not just what you pocket).
Cast aside your festive doylaks: dragon stuff is about to happen.
Multiplayer is lonely once you understand how it actually works.
Alpha 1.0.4