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It could be super painful in other countries because you can end up needing to let IRS take up to 30% withholding tax and then you actually have to file a US tax return to get the money back. As a Canadian, it's just a hassle to know secret password of tax treaty article to cite.

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This is up-to-date information: michellecornish.com/blog/how-to-fi You just need to put "business income" as the type of income instead of "royalties" with the same Article VII cited for 0% income and the same explanation that you carried out no US activities as part of getting it.

michellecornish.com

How to Fill Out a W-8BEN Form as a Canadian Author — Michelle Cornish - Canadian Author Illustrator

As someone who worked as a tax accountant for almost twenty years and earned a Chartered Professional Accountant designation, I found this form confusing when I first had to fill it out for one of my...

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Also, CRA recognizes that crowdfunding income is not taxable income if you aren't providing a service or product to people so you don't actually need to pay taxes on it if you aren't giving people shirts or something else the CRA could claim has actual tangible value to them.

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taxpage.com/articles-and-t is the general idea. Basically, if you give rewards, you turn it into taxable income. There's ridiculously complex information about it on the CRA site. I talked about it with an accountant and they recommended being really careful not to offer anything.

Canadian Taxation of Crowdfunding - TaxPage.com

Canadian Taxation of Crowdfunding—A Canadian Tax Lawyer Analysis What is Crowdfunding? As the name suggests, crowdfunding is a manner of raising funds from a large number of people. Recently,...

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The rules about rewards are somewhat vague and it might seem like you could get away with giving rewards in some cases without it turning it into taxable income. However, accountant that I talked to strongly recommended never giving out any rewards including no priority support.

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Since if you start giving out any rewards at all, the CRA is going to be very tempted to claim that all the donations are business income, including from other sources. Best to just keep it all clean of anything they could possibly claim is a product or service being offered.

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Yep. This is something I looked into back when I started accepting pizza donations. No strings attached, no promises. Thanks for all the info, nice to have something to refer back to if I need it.

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I recently won a battle with the CRA over my 2018 income taxes by the way, unrelated to anything to do with donations. They wanted $8k in additional taxes from me and somehow ended up having to pay me $3.2k since apparently I paid taxes that I didn't actually need to pay to them.

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$3.2k probably covers all the legal fees spent dealing with the CRA specifically about this but it definitely doesn't cover the massive ordeal that they put me through over 2 years. They're largely MIA right now due to COVID-19. Government employees have barely been doing work.

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It basically took a whole year of my lawyer repeatedly trying to contact them and reason with them to finally get that dealt with. I very much want to avoid any further nonsense with them so I'm extremely careful not doing anything that could make them upset about the donations.

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I don't do anything they consider work anymore since I live entirely off donations. I think it's inevitable that they're going to look into it and I'm going to have to prove that I'm not giving people any product/service.

2:54 PM · Aug 23, 2021Twitter Web App

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A legitimate fear of mine, one I could not afford deal with. I'm not working either, but I'm not at that point yet where I can live off donations, currently about CAD $270 spread out in small amounts over the month.

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Amount I'm getting from GitHub Sponsors recently doubled so I'm essentially earning what I would be as a software developer earning a local Toronto salary rather than relocating or doing US contract work. PayPal, XMR and BTC go entirely to funding other GrapheneOS devs now.

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GrapheneOS also entirely uses the Bitcoin/Monero to fund other developers and I haven't taken any of that myself largely because I don't want them deciding that I'm earning money investing in cryptocurrency or something. Also get enough money from GitHub Sponsors by itself now.

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90% of the taxes that I've paid have been on money that the CRA would have had no clue about and I've been 100% honest with them and yet they still decided to give me a massive hassle for 2 years because a company decided to screw me over filing bogus tax information with them.

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