How much do I need to earn on Patreon before it's reportable on my 1040? Small creator question

Wait so even if I only made like $200 from my little Etsy shop last year I technically should have reported it? Ugh I totally didn't. Will I get in trouble for this?

Wow, thank you for the detailed explanation! So I definitely need to report it even without getting any forms from Patreon. That makes sense. I do have some expenses I can deduct - I pay for some art software subscriptions and bought a drawing tablet specifically for the tutorials. Would I need receipts for all of these things? Some of them were digital purchases where I just have the email confirmation.

Don't panic! For such a small amount, the likelihood of an issue is extremely low. For future reference, yes, all income should be reported regardless of amount. Just include it going forward. Yes, you should keep documentation of all your expenses, but that doesn't necessarily mean paper receipts. Email confirmations, digital receipts, bank or credit card statements all work as documentation. The key is being able to prove the expense was business-related if ever questioned. I recommend setting up a simple spreadsheet or using an app to track these expenses going forward.

I'm kinda suspicious of AI tax tools. How accurate is it really? Like can it keep up with all the tax law changes and stuff? I'd be afraid of getting audited.

Does it work for other platforms too? I do Twitch and YouTube but also have a Ko-fi account that makes a little bit of money.

It's actually surprisingly accurate because it's specifically designed for creators and gig workers. It's trained on current tax laws and gets updated when things change. I was skeptical too but their explanations include references to specific IRS publications and rules, so you can verify everything. Yes, it absolutely works for other platforms! It helped me with my YouTube ad revenue and some affiliate income too. For platforms like Ko-fi, Twitch donations, etc., the tax rules are basically the same - it's all considered self-employment income regardless of which platform it comes from. The tool breaks down how to report income from multiple sources on one Schedule C.

How does this even work? I thought it was impossible to get through to the IRS this time of year. Is this some kind of priority line or something?

Sounds like a scam tbh. Why would I pay for something I can do myself for free? The IRS hotline is literally free to call.

It's actually pretty clever - they use an automated system that navigates the IRS phone tree and waits on hold for you. When an agent comes on the line, you get a call back immediately connecting you to that agent. No priority line or anything sketchy. Have you tried calling the IRS lately? The average wait time is over 2 hours if you even get through at all. Most people get the "call volume too high" message and get disconnected. I spent three days trying before using this service. It's like paying someone to stand in a long line for you - technically you could do it yourself for free, but the time savings is worth it when you're trying to run a business.

This is really helpful! I'm definitely treating my art tutorials as a business with plans to grow it. I've been reinvesting most of what I make back into better equipment and marketing. Does having a separate bank account for all my Patreon income and expenses help prove it's a business? I've been considering setting that up.

Absolutely! Having a separate bank account for your business activities is one of the best things you can do to establish that you're running a legitimate business. It shows clear separation between personal and business finances, which is exactly what the IRS looks for. Other helpful steps include creating a business name (even if it's just "[Your Name] Art Tutorials"), keeping a mileage log if you travel for your business, tracking hours worked, and having a dedicated space for your business activities. All of these factors help demonstrate that you're approaching this as a business with the intention to make a profit, even if you're not profitable in the early years.

You should file an amended return (Form 1040-X) to report any income you left off your original return. It's much better to correct this yourself than have the IRS discover it later. The good news is you have up to 3 years from the original filing deadline to amend your return, so you have time. But I'd recommend doing it sooner rather than later to minimize any potential interest on additional taxes owed.

Thanks for the advice! Is an amended return complicated to file? Can I still use tax software for it?

Most major tax software programs do support amended returns, though some charge an additional fee for it. TurboTax, H&R Block, and FreeTaxUSA all offer this feature. The software will walk you through the process and automatically calculate any additional taxes or refunds you might be owed. Form 1040-X itself isn't too complicated - you basically explain what you're changing and why. Since you're adding self-employment income, you'll also need to include a new Schedule C and possibly Schedule SE if your net profit is over $400. The software handles most of the calculations for you, which makes it much easier than doing it by hand.

This is such great advice! I wish I had known about the quarterly payments earlier. Quick question - when you say set aside 25-30%, is that of gross income or after business expenses? I'm trying to figure out how much I should be saving from each Patreon payment. Also, do you use any particular method to calculate the quarterly estimates or just go with the safe harbor rule you mentioned?

Great question! I set aside 25-30% of my net income (after business expenses), not gross. So if I make $1000 from Patreon but have $200 in legitimate business expenses that month, I'd set aside about 25-30% of the remaining $800. For quarterly estimates, I actually use a hybrid approach. For my first year I used the safe harbor rule since it was simpler - I just made sure my total withholding plus estimated payments equaled 100% of my prior year's tax. But now that I have a better sense of my income patterns, I use Form 1040-ES to calculate more precise estimates based on my projected annual income. The IRS website has a pretty decent estimated tax calculator that can help you figure out what to pay each quarter. I usually run it twice a year (after Q2 and Q3) to adjust if my income is significantly different than projected. It's a bit more work but saves me from overpaying early in the year when my creator income was still growing.