How does tax work with itch.io payouts (using the 'collected by itch.io, paid later' method)? Does itch.io take tax from the payouts before I receive it, or should I set aside money from the payouts to pay in taxes next year? If it's the latter, how should I determine how much to save for taxes? For example, if my current payout is $100, how much should I set aside for taxes?
Context: I live in the U.S., and I doubt I'll make over $400 on itch.io this year.
Thanks!
Itch.io collects sales tax from the money you earn, and for sales to the EU it also collects VAT. You still have to pay any taxes on your own income, according to your local laws. You should ask an accountant if you're not sure. I've heard from an US resident that such a small amount should not incur federal taxes at least, but this is not legal advice. We can't provide any. Please stay safe and ask a professional. :)
Ah okay, understood. Does itch.io send out 1099s? I remember getting a 1099 from Spreadshirt for the $13 I made uploading my designs back in the day.
Will check with local laws about taxes. I live in CA and have paid ~25-30% on a 1099 before, but that was for a full-time living wage. I think the percentage should be less on a small amount.
Thanks!
