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I’ve made an app that’s completely free to use and isn’t otherwise monetised, for now. That being said, I want to do a couple things that involve money:

  1. For a campaign, I want to donate X dollars per content created on the app.

  2. I want to pay influencers to upload content.

I’m keen to understand what my best options are to (1) do this legally and (2) save some money on US taxes. For context, I’m the sole creator of this app and will be funding everything out-of-pocket. That being said, I'm interested in attracting outside funding for future donation campaigns, depending on how the first one goes.

I've done a little research about sole proprietorships. My understanding is that if I don't formally set up a business (eg an LLC), then I run a sole proprietorship by default. Because there's no difference between my personal and business assets/expenses, then I can claim the donation contributions in my tax return. Is this assumption right?

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    I’m voting to close this question because this site doesn't give legal advice and the question belongs on money.stackexchange.com Commented Apr 2, 2022 at 23:31
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    This is asking what the ;law permits. It is not asking how to do something or what option to choose. This is not a request for legal advice as this site defines it, and should not be closed on that basis.. Commented Apr 3, 2022 at 1:59

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You are not running a business, you cannot claim tax deductions

Expenses are only tax deductible if they are incurred in order to make income. As stated, you are not and have no clear plans to generate an income so the expenses you incur in pursuit of what is, essentially, a hobby, are not tax deductible. It doesn’t matter what legal structure you wrap around them.

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