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Author Topic: Could a faucet owner include their payouts as donations on their taxes in US?  (Read 652 times)
coinableS
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August 31, 2015, 03:04:47 AM
 #1

Just like the title asks.
Is there a minimum value amount to give in order to claim it as a donation? If not, couldn't a faucet owner consider their payouts as donations and then include them on their next years taxes? I own a faucet, but I don't plan on doing this because it just seems silly, but the idea popped in my head today while driving and thought I'd ask.

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August 31, 2015, 03:09:30 AM
 #2

Just like the title asks.
Is there a minimum value amount to give in order to claim it as a donation? If not, couldn't a faucet owner consider their payouts as donations and then include them on their next years taxes? I own a faucet, but I don't plan on doing this because it just seems silly, but the idea popped in my head today while driving and thought I'd ask.

look at satoshis as  content, when a member comes to your site. coming for fresh (articles) bitcoin.  they are coming for that.
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August 31, 2015, 09:19:28 PM
 #3

Plus it would depend on if your faucet is giving out bitcoins freely or are you using advertisements to provide income in order to fund the wallet. I would think many of the so called faucets these days are more of a money making scheme for the operator than anything that could be claimed as a tax write off. Even if you did offer a true faucet without advertising I think it would come down to the intent, what are your trying to promote by giving away free coins and by doing so would it benefit you financially?
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September 01, 2015, 03:39:16 AM
 #4

No, it would not count as making donations. Firstly for them to consider it as charity it must be given to a qualified organization and not to specific individuals, which applies here since you're only giving to people who are enthusiastic about bitcoins. And if you receive any sort of benefits for doing this then again it won't be counted as donation.

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September 01, 2015, 04:30:11 AM
 #5

Are you donating money when you pay out users (as defined by law)? If so then yes, you would be able to claim that you were donating money when you paid out users. If, according to the law, you were not donating money when paying out faucet users then, you would not be able to claim these payments as donations without committing tax fraud.

I am no lawyer, and more importantly, I am not your attorney, nor do I have any interest in giving you legal or tax advise, however I am going to say that chances are faucet payments are not donations.

Faucet payments would more likely qualify as a business expense which can offset business revenue (eg advertisement revenue), along with your other business expenses (eg hosting, advertising expenses, and similar).

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September 01, 2015, 06:03:18 AM
 #6

If you do it in the way Freebitco.in is doing it, you might just get away with it. They have a donation option in the faucet and people donate some of their free Satoshi to it. They then use BitPay as a proof of payment :
https://bitpay.com/invoice?id=MPXZFRLaCDANerD8asDZcm which can be used as proof for tax purposes too.

You might follow this example, and try to claim that back from Tax? The tricky part is, some of that comes from the users, even though it's Ad company income being re-distributed for charity. ^hmf^

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September 01, 2015, 06:12:48 AM
 #7

If you do it in the way Freebitco.in is doing it, you might just get away with it. They have a donation option in the faucet and people donate some of their free Satoshi to it. They then use BitPay as a proof of payment :
https://bitpay.com/invoice?id=MPXZFRLaCDANerD8asDZcm which can be used as proof for tax purposes too.

You might follow this example, and try to claim that back from Tax? The tricky part is, some of that comes from the users, even though it's Ad company income being re-distributed for charity. ^hmf^

Doesn't Bitpay charge a fee?
Is that a good idea (if they do charge a fee) considering the fee?

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S4VV4S
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September 01, 2015, 06:21:41 AM
 #8

Just like the title asks.
Is there a minimum value amount to give in order to claim it as a donation? If not, couldn't a faucet owner consider their payouts as donations and then include them on their next years taxes? I own a faucet, but I don't plan on doing this because it just seems silly, but the idea popped in my head today while driving and thought I'd ask.

I don't think it counts as donation mainly because you need to have proof of payment to each individual.

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coinableS
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September 01, 2015, 12:42:29 PM
 #9

No, it would not count as making donations. Firstly for them to consider it as charity it must be given to a qualified organization and not to specific individuals, which applies here since you're only giving to people who are enthusiastic about bitcoins. And if you receive any sort of benefits for doing this then again it won't be counted as donation.

I don't think that's true.
A church that gives out food or clothes to random people are allowed to include that under donations on their taxes and they benefit from a wide source of other income streams.

bitbaby
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September 03, 2015, 05:43:25 AM
 #10

No, it would not count as making donations. Firstly for them to consider it as charity it must be given to a qualified organization and not to specific individuals, which applies here since you're only giving to people who are enthusiastic about bitcoins. And if you receive any sort of benefits for doing this then again it won't be counted as donation.

I don't think that's true.
A church that gives out food or clothes to random people are allowed to include that under donations on their taxes and they benefit from a wide source of other income streams.

Yes but they give those to poor people and not some chosen specific people, plus they don't make anything from doing that, which a faucet does from advertisement and even if you use the money from advertisements to refill the faucet it will still be called not charity because you're doing that to promote bitcoin. And a church is church, everything they do will almost always come under some sort of charity and they will get rebate on their tax return for doing it.

But go ahead and try it, what's the worse that could happen, right? Either they will include it or they won't. If I am wrong and you're right then this will give others one more reason to run a faucet.

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September 03, 2015, 08:27:59 AM
 #11

For regular people, you can only deduct donations made to charitable organizations. Payments to random people are not deductible.

http://www.irs.gov/taxtopics/tc506.html

Quote
To be deductible, you must make charitable contributions to qualified organizations. Payments to individuals are never deductible. To determine if the organization that you have contributed to qualifies as a charitable organization for income tax deduction purposes, review Exempt Organizations Select Check on IRS.gov. For more information, see Publication 526, Charitable Contributions and Can I Deduct My Charitable Contributions? on IRS.gov.

The exception is if your faucet is operated by a qualified charitable organization, and giving out coins is part of the organization's charter. But this doesn't appear to be the case.
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September 03, 2015, 11:58:58 AM
 #12

If you do it in the way Freebitco.in is doing it, you might just get away with it. They have a donation option in the faucet and people donate some of their free Satoshi to it. They then use BitPay as a proof of payment :
https://bitpay.com/invoice?id=MPXZFRLaCDANerD8asDZcm which can be used as proof for tax purposes too.

You might follow this example, and try to claim that back from Tax? The tricky part is, some of that comes from the users, even though it's Ad company income being re-distributed for charity. ^hmf^

Doesn't Bitpay charge a fee?
Is that a good idea (if they do charge a fee) considering the fee?

I think they used Bitpay to have physical proof that the donations is going to a legitimate charity and not back into their own pockets. Different countries have different legislation when it come down to taxation, but most of them require documentary proof of these donations, and Bitpay offer a official invoice for that service.

The fee is justified for the service it offers, but in my opinion any fee's for charities should be scrapped.

Freebitco.in donated some of their own income to start the process, and now people donate some of the own income and once it reaches $100 they will transfer it via Bitpay to the charity.

coinableS
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September 03, 2015, 12:36:58 PM
 #13

For regular people, you can only deduct donations made to charitable organizations. Payments to random people are not deductible.

http://www.irs.gov/taxtopics/tc506.html

Quote
To be deductible, you must make charitable contributions to qualified organizations. Payments to individuals are never deductible. To determine if the organization that you have contributed to qualifies as a charitable organization for income tax deduction purposes, review Exempt Organizations Select Check on IRS.gov. For more information, see Publication 526, Charitable Contributions and Can I Deduct My Charitable Contributions? on IRS.gov.

The exception is if your faucet is operated by a qualified charitable organization, and giving out coins is part of the organization's charter. But this doesn't appear to be the case.

Well there it is, thanks Soros! I knew my wandering mind while driving was crazy! So someone would have to create a faucet that only paid out to qualified organizations which would be nearly impossible and entirely unpractical.

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September 03, 2015, 03:11:27 PM
 #14

For regular people, you can only deduct donations made to charitable organizations. Payments to random people are not deductible.

http://www.irs.gov/taxtopics/tc506.html

Quote
To be deductible, you must make charitable contributions to qualified organizations. Payments to individuals are never deductible. To determine if the organization that you have contributed to qualifies as a charitable organization for income tax deduction purposes, review Exempt Organizations Select Check on IRS.gov. For more information, see Publication 526, Charitable Contributions and Can I Deduct My Charitable Contributions? on IRS.gov.

The exception is if your faucet is operated by a qualified charitable organization, and giving out coins is part of the organization's charter. But this doesn't appear to be the case.

Well there it is, thanks Soros! I knew my wandering mind while driving was crazy! So someone would have to create a faucet that only paid out to qualified organizations which would be nearly impossible and entirely unpractical.

Why create a faucet solely for that purpose? You can still create any normal faucet and incorporate a charity feature into that, and those donations could be regarded as a

taxable expense. You might still remember the suggestion I made for faucets to alleviate poverty, http://www.bitbiz.io/threads/poverty-is-faucets-the-answer.551/

and if you follow that example... you might just have a case to claim from tax for this purpose. I think it might be doable....  Huh

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