If I donate XMR to e.g. the developers of a free software project, how are taxes handled? Is the developer assumed to report his profits to the state and handle the taxes or do most devs just keep 100% of the donation?
If it would somehow be made public that I donated x amount to a dev and that neither of us payed taxes, would the dev be taken accountable or me or both of us?
It depends what country you’re in. In the US, you get a tax cut for charitable donations. It has to be donated to a nonprofit.
So say you buy xmr for $100 and donate it when it’s a value of $150. Normally if you sold it, you’d owe capital gains taxes on the $50 profit. Since you donated it, you have a write off for the full amount of the value at the time of the donation, so your capital gains at the end of the year get taxed their value minus the charitable donation, which is $150 in this example.
If the dev is running a nonprofit, they don’t owe taxes. If they aren’t, the entire amount is taxed as income, plus capital gains when they sell if they sell later for a profit.
If the dev isn’t running a nonprofit, and you donate to them, it isn’t a charitable donation, it’s a gift. You’ll owe taxes on the capital gain (taxes on $50 in the above example) and you have a lifetime gift limit that you can gift with no tax liability, but once you reach that limit you’ll owe taxes on all subsequent gifts. I believe this limit is $10,000,000.
Again. This is for the US. I don’t know what country you live in. Some countries tax nonprofits, don’t allow you to write off charity, have no gift taxes, some even have no capital gains taxes. Some countries the recipient of a gift pays tax, some the giver, in the US it’s the giver.
XMR donations to the MAGIC Monero Fund, which funds Monero research and development, are tax deductible for the donor if you file taxes in the USA: https://monerofund.org/ . Or donations can be made anonymously in XMR if donors do not care about making tax deductions.
Recipients of funds, i.e. devs and researchers, must KYC to MAGIC. It’s a system that works for some devs. Others can use Monero’s Community Crowdsoucing System (CCS).
(I’m on the MAGIC Monero Fund committee.)
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Well, the recipient if they’re paying taxes would report it, but they can’t prove who gave it. If you give your name they can. If it’s a charitable donation you’d probably want to to write it off.
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