As you may have seen in my feed and in emails from Patreon, as of July 1, 2020, Patreon has to start charging applicable sales tax for US states. I wanted to update you on the latest from Patreon, and what I’m doing in response.
Taxes and my fiction
Patreon recently released some new under-the-hood tax settings for creators. I’ve been updating these settings so only the correct amount should be taxed.
Patrons, typically the only potentially taxable benefit you receive from me is the monthly short story ebook release, which has a list price of $2.99.
What this means for you: If your patron tier includes monthly fiction releases, tax will only be assessed on that $2.99 amount. For example, if you are supporting me and my work at the $20 tier, any tax should be assessed on $2.99, not $20. Depending on where you live, taxation on digital downloads such as ebooks varies, so there may or may not be any tax assessed.
But wait… what about other benefits, such as the WANDER bundle, or the ebooks and/or signed paperbacks you might get at signup? Since these are one-time bonuses from me as a thanks to you, they are typically exempt from taxes.
For most patrons, my understanding is that benefits such as mine will typically see little to no tax. If you have concerns or questions though, please email or message me, and I will do my best to help.
More details from Patreon about sales tax
Patreon has sent out some other details about sales tax, and below is info straight from them. If you have questions, there are also links to Patreon’s support folks.
Here’s the info from Patreon:
Due to new laws passing in several countries and US states, Patreon will be required to start charging sales tax on some pledges starting July 1st.
Less than half of all patrons will be charged sales tax, and for most, the amount will be very small. For example, sales tax rates in the US range from 4% to 11%, so on a $5 pledge, that would be between 20 cents and 55 cents.
Whether or not you will be charged sales tax depends on your location, and what is considered taxable there. Not every pledge is taxable, not all benefits are taxable in every location, and sometimes only a fraction of a pledge will be taxable. The money that Patreon collects as a result of these laws are paid directly to local governments.
I’m working closely with Patreon to ensure I’m able to save you as much money as possible when it comes to sales tax – which is not something that’s possible with other platforms.
If you’re in a location where sales tax will be required, you should expect to receive an email from Patreon with more information about this very soon, but I wanted to make sure you were aware of these changes way ahead of July 1st when they go into effect.
P.S.: June 19 is Rucksack Day! Stay tuned for this month’s early-access release, and thank you for all of your support!