Ok, so a friend and I are in the process of making a game together, and our plan is to self-publish on Steam. The questions start filing in when we get into taxes, Steam/Valve doesn't do split payments, and will pay the account and person on file. Let's say my information is on file, and I live in PA, and she lives in NY, so the money would be deposited into my account, and taxes would be withheld for the total income. Let's say we make 50,000 in total post-fees and pre-tax withholdings (A hypothetical number, I don't think we'll be that successful, but I just want to be prepared, just in case).
How do we go about filing for the 25,000 we each would have made?
I'm assuming there would be a W2-esque document I would get from Valve, but how would I validate that I didn't keep the entire 50,000 and split it with my partner? And how would their taxes work if their information doesn't appear on the tax document?
Question about filing taxes as a partner.
byu/Ok_Neck_6194 intax
Posted by Ok_Neck_6194
2 Comments
You need to set up a separate business entity with its own EIN, own bank account, and absolutely make sure you have an operating agreement for this entity.
The payments will go to this bank account in the business’ name and the business will file its own taxes (partnership return by default).
The partnership return will distribute the income to each partner via a Form K-1, which each partner will use to file their own taxes.
You could either be a partnership and file a partnership return or someone could be a sole prop and hire the other person, either as an employee or a contractor.