Are website donations taxable?

[Grinler]

A common ting you see on many sites are where the site asks for the support, monetary or otherwise, to help keep the site going.

Anyone have any info if monetary donations like this are taxable and need to be reported to the irs? In my research, one side says that it is a gift and therefore does not need to be taxed. On the other side, i have heard that the only reason that you are receiving these donations are because of a service you had performed and then it can be construed as a tip or money received "due" to the service.

Anyone have any definitive info?

[ogletree]

Only if they are an organazation that is not taxable like a charity or church. Just some guy that makes a free game or something on sourceforge is not.

[diamondgrl]

The answer is that the income received IS taxable as business income. On the other hand, you can deduct expenses against this income.

As for the donee, the donation is tax-deductible for the donee ONLY if the organization is organized as a legitimate non-profit and that no item of value was received in exchange.