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

I'm a game developer on Roblox and have been making games where users spend Robux. So far I've earned about $40,000 worth of Robux (before taxes). It's not cryptocurrency, just the platform's virtual currency. My plan is to hold onto my Robux until I turn 18 later this year. Once I'm 18, I'll be able to exchange the Robux for real money through DevEx (Developer Exchange). From what I understand, I'll need to file taxes, but I'm completely lost on how this works. Will I need to report this as income for the year I cash out? Or should I have been reporting it all along as I earned it? Also, would this be considered self-employment income? Do I need a special form? I've never filed taxes before and my parents are just as confused because they've only ever dealt with W-2s from regular jobs. Any advice would be super appreciated. I don't want to mess this up and get in trouble with the IRS!

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21 comments

Liam Fitzgerald

•1y

As someone who works with young entrepreneurs, I can help clarify this situation for you! When you earn Robux through Roblox development, you don't have a taxable event until you convert those Robux to real currency through DevEx. So you're correct - you'll report the income in the tax year when you actually cash out. When you do cash out, Roblox will likely send you a 1099-NEC form if you receive $600 or more in a calendar year. This is considered self-employment income, so you'll need to file Schedule C with your tax return to report this business income. You'll also need to pay self-employment tax (about 15.3%) on your net earnings. The good news is you can deduct legitimate business expenses against this income - things like software subscriptions, assets purchased for game development, courses to improve your skills, portion of internet if used for business, etc. Since this will be your first time filing, I'd recommend using tax software designed for self-employed individuals or consulting with a tax professional who can guide you through the process.

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Liam Fitzgerald

•1y

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.

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Giovanni Mancini

•1y

Hey, just wanted to share my experience! I was in almost the exact same situation last year with my Roblox earnings. After trying to figure everything out myself and getting completely overwhelmed, I used this AI tax assistant at https://taxr.ai that specifically helped with gig/freelance/creator income. I uploaded screenshots of my DevEx transactions and it automatically categorized everything, explained what forms I needed, and even helped me identify deductions I didn't know I qualified for (like my development laptop and software subscriptions). Saved me a ton of stress and probably money too since I was able to write off expenses I would have missed. It was especially helpful for figuring out the Schedule C stuff since it walks you through each section with examples relevant to digital creators. Might be worth checking out!

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Giovanni Mancini

•1y

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.

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Fatima Al-Suwaidi

•1y

Update: I ended up trying that taxr.ai thing after all. I was honestly surprised by how well it worked for my situation. I had a mix of YouTube revenue, Twitch donations, AND Roblox DevEx earnings, and it handled all the different income streams perfectly. The best part was it explained exactly how to handle "digital goods" income specifically, which most tax preparers I talked to were clueless about. It also flagged that I could deduct part of my internet bill, my editing software, and even a percentage of my rent for my home office - things I wouldn't have known were legitimate write-offs. If you're in the gaming/creator economy, it's definitely worth checking out. Saved me way more than I expected in deductions.

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Dylan Mitchell

•1y

Another thing to consider - dealing with the IRS directly can be a nightmare if you have questions about your specific situation. I spent WEEKS trying to get through to someone at the IRS about my Roblox earnings last year. After waiting on hold for hours multiple times, I finally found https://claimyr.com which got me connected to an actual IRS agent in about 15 minutes. They have this demo video here: https://youtu.be/_kiP6q8DX5c showing how it works. Basically they navigate the IRS phone tree for you and call you when an agent is ready. The IRS agent was able to confirm exactly how I should be handling my game dev income and what documentation I needed to keep. Worth every penny not to waste days on hold!

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Dylan Mitchell

•1y

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.

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Dmitry Popov

•1y

I have to admit I was totally wrong about Claimyr. After trying unsuccessfully to reach the IRS for THREE DAYS (kept getting disconnected after 2+ hours on hold), I broke down and tried it. Got connected to an actual IRS agent in about 20 minutes while I just went about my day. The agent confirmed all my questions about reporting Roblox income and even helped me understand how to handle business expenses related to game development. The peace of mind from getting official answers directly from the IRS was absolutely worth it. They even helped me set up a payment plan for taxes I didn't realize I owed from last year's earnings. Would've been in a much worse situation if I hadn't gotten through to them before filing.

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Ava Garcia

•1y

One thing nobody's mentioned yet - if you're turning 18 this year, you might still be claimed as a dependent on your parents' taxes. This can affect how you file and what deductions/credits you're eligible for. If your parents claim you as a dependent, make sure they know about this income because it could potentially affect their return as well. And heads up - if your net earnings are over $400, you're required to file regardless of dependent status! Also, since you're young and this is your first time filing with business income, keep SUPER detailed records of everything. Document when you earned the Robux, when you exchanged them, what the value was, and save all receipts for anything that could be a business expense. The IRS loves to see good documentation.

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Ava Garcia

•1y

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.

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Zainab Ismail

•1y

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!

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Mary Bates

•1y

Great question! I went through something similar with my Twitch streaming income. One thing I'd add to the excellent advice already given - make sure you understand the difference between gross income and net income for self-employment tax purposes. Your $40k in Robux will be considered gross income when you cash out, but you can reduce your taxable income (and thus your self-employment tax) by deducting legitimate business expenses. Keep receipts for everything related to your game development: computer equipment, software licenses, internet costs, even educational resources like courses or books. Also, since you mentioned you're turning 18 this year, be aware that you might want to consider spreading out your DevEx withdrawals across multiple tax years if possible. Taking it all in one year could push you into higher tax brackets, whereas spreading it out might keep you in lower brackets each year. One last tip - consider opening a separate business checking account once you turn 18. It makes tracking business income and expenses much cleaner for tax purposes, and the IRS likes to see that separation between personal and business finances.

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