Game Dev - How to file taxes for Roblox earnings when I turn 18?

Thanks for the info! Quick question - if I cash out $40k all at once, won't that put me in a higher tax bracket than if I had been reporting smaller amounts each year as I earned it? And do I need to file quarterly estimated taxes or just annual?

You're right to be concerned about cashing out all at once. If you take the full $40k in one tax year, it will all be taxable in that year which could potentially push you into a higher tax bracket. However, tax brackets are marginal, meaning only the amount within each bracket gets taxed at that bracket's rate, not your entire income. For quarterly taxes, the IRS generally expects you to pay taxes as you earn income. Since this will be your first significant income, you likely won't face penalties for not making quarterly payments this first year. However, going forward, if you expect to owe $1,000 or more in taxes in a year, you should make quarterly estimated tax payments to avoid potential penalties.

Does it help with figuring out estimated quarterly payments too? I'm worried about getting hit with penalties since I've heard the self-employment tax can be brutal.

I'm skeptical about these AI tax tools. How accurate is it really? Did you end up having a professional review it afterward? My brother got audited using some online tax tool and it was a nightmare.

Yes, it actually does calculate your quarterly estimated payments based on your projected annual income. It creates a payment schedule with the amounts and due dates, and can even send reminders before each quarterly deadline. I was also skeptical at first! I had my uncle (who's an accountant but not specialized in digital creators) review everything after I used it. He was impressed and only made a couple minor adjustments. The nice thing is it explains the reasoning behind each recommendation, showing the relevant IRS guidelines, so you can understand why it's suggesting certain deductions or filing methods.

How does this actually work? Seems weird that they can get through when regular people can't. Is this some kind of insider connection thing?

This sounds like a scam. Why would I pay someone to call the IRS for me when I can just do it myself? Plus, how do I know they're actually connecting me to a real IRS agent and not just someone pretending to be one?

It's actually surprisingly simple - they use an automated system that continually redials and navigates the phone tree until it gets through, then holds your place in line. When an agent is about to pick up, they call you and connect the calls. No special connections, just technology solving the hold time problem. They're not answering your tax questions themselves - they're literally just connecting you directly to the IRS's official phone line once an agent is available. You're talking to the same IRS representatives you would if you called yourself, just without the hours of hold time. You can verify you're speaking to a real IRS agent by the information they can access about your tax records.

Do you know if they can still be claimed as a dependent if they make $40k? I thought there was an income limit for dependents?

There's a common misconception about income limits for dependents. For qualifying children (which includes full-time students under 24), there's actually no income limit - the tests are about age, relationship, residency, and support. The support test requires that the child doesn't provide more than half of their own support for the year. So even with $40k in income, if most of that money is saved and not spent on supporting yourself (housing, food, clothing, medical, etc.), your parents could potentially still claim you as a dependent. It really depends on your specific situation and how much of your own support you're providing with those earnings.

I used TurboTax Self-Employed last year for my Roblox earnings. It was definitely worth it - the regular version doesn't guide you through Schedule C which you'll need. The self-employed version also has specific sections for digital goods and online creator income that were super helpful. Make sure you categorize your income as "digital goods sales" or "online creator" rather than just "self-employment" when it asks - this affects what deductions it suggests for you. It even has specific questions about game development expenses!

That's exactly what I needed to know! I was on the fence about spending the extra money but it sounds like it'll save me headaches in the long run. Appreciate the tip about categorizing as "digital goods sales" too - wouldn't have known to do that.

I'd actually recommend against TurboTax for this situation. Their self-employed version is overpriced and they hide a lot of forms behind paywalls. Try FreeTaxUSA instead - they handle Schedule C and all self-employment forms for way cheaper, and they're just as user-friendly.

This is really helpful advice! I'm actually in a similar boat - made decent money from my Roblox games but haven't cashed out yet. The 25-30% savings rule is something I hadn't thought about but makes total sense. Quick question though - when you mention keeping records of when you earned each amount, what exactly should I be documenting? Like screenshots of my Roblox developer stats page? Or is there a more official way to track this? I want to make sure I'm keeping the right paperwork in case the IRS ever asks questions about timing. Also, do you know if there's a limit to how much you can contribute to a SEP-IRA in your first year of self-employment income? Seems like it could be a smart way to reduce that tax burden while still being responsible about saving.

This is super reassuring to hear from someone who went through the exact same thing! I love the spreadsheet idea - I've been pretty disorganized with tracking my earnings so far. When you say you documented the USD equivalent value at the time, did you use the current DevEx rate even though you weren't cashing out yet? Or is there some other conversion rate I should be using? Also, I had no idea about deducting Roblox Premium subscriptions and catalog assets! I've definitely bought a bunch of audio files and some 3D models for my games. Do I need to keep receipts for those purchases, or does Roblox's transaction history work as documentation? Thanks for mentioning that tax brackets are marginal too - I keep seeing people freak out about "jumping tax brackets" but I wasn't sure if that was actually as bad as it sounds.

For the USD equivalent value, I used the current DevEx rate at the time I earned the Robux, even though I wasn't cashing out immediately. This gave me a good baseline for tracking my potential income. The DevEx rate does fluctuate slightly, but it's been pretty stable at around $0.0035 per Robux for a while now. For documentation, Roblox's transaction history is actually perfect! You can access your complete purchase history through your account settings, and it shows the date, amount, and what you bought. I'd recommend taking screenshots or downloading CSV exports of your transaction history periodically - just in case. The IRS accepts digital records, so you don't need physical receipts. And yes, the "jumping tax brackets" fear is mostly overblown! Only the income above each bracket threshold gets taxed at the higher rate, not your entire income. So even if part of your $40k pushes you into a higher bracket, only that portion gets taxed at the higher rate. Plus, with business deductions, your actual taxable income will likely be lower than $40k anyway. The standard deduction for 2024 is $14,600 for single filers, so that comes off the top automatically. Then any legitimate business expenses (equipment, software, Premium subscriptions, asset purchases, etc.) reduce your taxable income even further. You might be surprised how manageable the tax burden ends up being!

This is really solid advice about the business bank account! I'm definitely going to set one up before I cash out. Quick question though - do you need an actual business registration (like an LLC) to open a business bank account, or can you just use your SSN as a sole proprietor? I'm trying to keep things simple for my first year but want to make sure I'm setting up the foundation correctly. Also curious if there are any banks that are particularly good for young entrepreneurs or if they're all pretty much the same for basic business checking? The point about sitting down with parents is spot on too. Mine have been worried I'm going to mess something up with taxes, but I think walking them through what I've learned here will help them feel better about the whole situation.

You can absolutely open a business bank account as a sole proprietor using just your SSN - no need for an LLC or formal business registration! Most banks will let you open a "sole proprietorship" business account with just your social security number and ID. You'll use your legal name as the business name (like "Lena Schultz" or "Lena Schultz - Game Development"). For banks, I'd recommend looking at local credit unions first - they often have lower fees and are more flexible with young entrepreneurs. If you prefer bigger banks, Chase and Bank of America both have decent business checking options, though watch out for monthly fees if you don't maintain minimum balances. One tip: when you open the account, mention that you're a digital creator/game developer. Some banks have specific programs or fee waivers for creators and freelancers. Also ask about connecting it to accounting software like QuickBooks Self-Employed if you think you might want that later. Your parents will definitely feel better once you show them you have a plan! Having that separate business account will probably reassure them that you're taking this seriously and handling it responsibly. Plus, when tax time comes, you'll just need to export one clean bank statement instead of trying to sort through mixed personal/business transactions.

This is incredibly helpful advice from a professional perspective! The timing strategy point is something I hadn't considered at all. Since I turn 18 in late summer, I'll have the flexibility to choose whether to cash out in late 2024 or wait until early 2025. The business vs hobby distinction is reassuring too - I was worried the IRS might view this as just a hobby since I'm young, but $40k definitely seems like it crosses into business territory. Quick question about state taxes - I'm in Texas, so no state income tax to worry about there, right? And when you mention consulting with a tax professional for the first year, should I be looking for someone who specifically has experience with digital creators/gaming income, or would any CPA who handles self-employment be sufficient? I want to make sure whoever I work with actually understands the Roblox/DevEx process and doesn't just treat it like generic freelance income. Thanks for taking the time to share your professional insight - it's really valuable to get perspective from someone who works with creators regularly!

You're absolutely right about Texas - no state income tax there, so that's one less thing to worry about! That actually puts you in a pretty good position compared to creators in high-tax states like California or New York. For finding the right tax professional, I'd definitely recommend looking for someone with digital creator experience if possible. While any CPA can handle Schedule C and self-employment tax, someone familiar with gaming/creator income will better understand things like: - How to properly categorize DevEx income vs other revenue streams - What expenses are legitimate for game developers (asset purchases, software, equipment depreciation) - Timing strategies for irregular income like yours - How to handle virtual currency conversions for tax purposes You can search for "creator economy tax specialists" or "digital freelancer CPAs" in your area. Many work remotely now, so you're not limited to just local professionals. Some questions to ask potential CPAs: Have they worked with Roblox developers before? Do they understand DevEx? Can they help with quarterly estimated payments going forward? The investment in professional help for your first year will pay for itself - both in potential tax savings from deductions you might miss, and in learning the proper procedures for future years when you might want to handle it yourself. Given your income level and the complexity of creator taxes, budget around $500-800 for professional preparation this first year. It's a legitimate business expense you can deduct next year!