Become a Youtuber or Twitch streamer to write all entertainment/collectibles off of your taxes

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Dryker

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#1  Edited By Dryker

Am I an idiot for just realizing this? Is this the main reason why there are so many streamers out there with low to no followers who constantly put up more content? I believe the rule is, you're allowed to write off all expenses for three years without making a profit. BUT! Even if you claim a small profit, it'd probably be worth the write offs. It's so easy to be a streamer these days, there must be tax law in place to prevent this, right? Anyone have any input on this?

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ltcolumbo

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Isn’t the standard deduction like $12,000 now? For most people in the streaming age range, that’s going to be bigger than itemizing game and amiibo purchases for any given year.

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Savage

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chaser324

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#4 chaser324  Moderator

Unless you're successful and are legitimately committing to it as your full-time job, it's unlikely you'd be able to write off enough for it to be worth it.

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TheRealTurk

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#5 TheRealTurk  Online

Yeah. Maybe . . . don't do that. The test isn't whether you are making a profit, the test is whether your underlying motive is to make a profit. There's an entire factor test the IRS uses to figure that out and most of the factors boil down to "are you running this like an actual business?"

So it's not something you can just do because it looks easy and you might have a fun time doing it. Are you working regular hours doing it? Do you have specialized education or experience in the field? Do you have separate bank accounts for your business? If you aren't making money, are you taking steps to improve profitability? Are you extensively documenting all those steps?

Plus, the amount of money you are likely to make is probably not going to justify the amount of time and effort that goes into itemizing your taxes. You've got to save all your receipts, figure out what's deductible and what's not, split that out on the receipts that mix in non-deductible stuff. It's a shit-ton of work. When I was a kid I remember it used to take my mom a week and the entire kitchen table to do it.

You learned not to bother her during that week.

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notnert427

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I wholly respect the spirit of this idea, but yeah, it's more trouble than it's worth. Regular taxes are fairly easy and straightforward. Tacking on a side hustle small business (assuming you're actually making your money at a "real" job) to your taxes is not simple at all. It's not like you get to put up a youtube stream and then just deduct all video game expenses from your taxes. You have to demonstrate the income or at least attempts to make income off of it, so at best you have a pile of paperwork and a pain in the ass that's fraught with the potential for audit. The IRS doesn't really give a shit about standard personal taxes. They very much give a shit about "businesses" intended for what's basically tax fraud, and can and will quickly make your life a nightmare and seize control of any and all income and assets they feel like during even an inquiry into the legitimacy of an enterprise.

The government is largely incompetent and I have a lot of problems with our tax structure, but do not mess with the IRS as an average dude trying to pull a fast one. It will end badly. There are a good number of wealthy assholes who successfully defraud the IRS annually via "charities" or "nonprofits", but there's a skill to pulling that off. It isn't worth the effort unless you're talking about massive amounts of money, and even then it's morally/ethically questionable as all hell. I can get way more on board with the idea of middle-class individuals finding ways to lower their tax burden, but the reality is that the IRS is plenty willing and able to crush any average joe who's trying to get one over on them.

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wardcleaver

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#7  Edited By wardcleaver

I do not think that a tax write-off is the reason so many people are streaming games. As others have stated, for most streamers, the paperwork burden for setting up a business is probably not going to off-set the income gain from writing off game related expenses. I would imagine the bigger YT/Twitch Streamers can afford accountants/financial planners/lawyers to handle the business end of things. For everyone else, it is probably not worth it.

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Dryker

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Do any of you own businesses?

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Dryker

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@savage said:

You'd be inviting an audit. You would have to convince the IRS that what you're engaged in is a business, not a hobby. And it would not be trivial to get the IRS to believe you. They've seen more flimsy tax evasion schemes than you can imagine.

A Google search will turn up more info; e.g.: https://www.thebalancesmb.com/deduct-business-expenses-without-profit-397629

That link lists so many factors that it only invites arguments in defense of this very topic. The more convoluted a law is, the more loopholes can be found. It even states near the end that if "losses" are reducing over the years, that is a GOOD sign that the company is legit. Apps these days make it really easy to keep business records, btw.

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Tennmuerti

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#10  Edited By Tennmuerti

Not only do I run a small business, but it's a business in the sphere of saving people money. Granted it's not in the US but rather in EU.

Like others have said, it's not worth it, not the time nor the effort, for the miniscule amounts you would save if any for the attempted write off, if anything you will end up in the red time/money wise attempting to do it.

There are plenty of loopholes in tax laws everywhere, the question is not whether they exist, but whether they are economically viable for the size of your business vs. the savings possible, while also remaining legal on paper if/when somebody decides to check.

The reason there are so many streamers/youtubers that don't have much of an audience is very very simple, it's an easy and very tempting business to get into and start doing, and very very hard to actually break out and make anything sizable and long term out of; ratio wise compared to the numbers attempting it; so the vast majority of those attempting it remain at a minimal level and eventually fail/die off, but there will always be a mass of those attempting to get started regardless. It is essentially the struggling actor/actress Holywood syndrome of this digital generation.

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soulcake

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I can see someone yelling at a IRS agent "THESE GOLDEN AMIIBO's WILL BE TRIPLE THERE VALUE 5 YEARS FROM NOW! THAT's MY BUSINESS!"