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From the quoted paragraph I get: You sell for $100. Amazon was taking $30. Now Amazon takes $20 and gives you a "promotional credit" of 10% of the $80, or $8
by biztos 5y ago
From the quoted paragraph I get:
You sell for $100. Amazon was taking $30. Now Amazon takes $20 and gives you a "promotional credit" of 10% of the $80, or $8.
So if you use all of the "promotional credit" then you make $88 which is not quite the equivalent of 90% but pretty close.
Assuming "promotional credit" means just regular credit you can use for anything on AWS, I wonder how much of this credit either gets left on the table (don't need AWS, credit expires) or stimulates further spending for Amazon (let's use AWS, it's "free").
It might be interesting to have that extra 8% not booked as revenue, but IANAn Accountant.
- handrous 5y agoWhat are the tax implications of this? Is that $8 income?
- ezekg 5y agoWhy would a credit be taxable? Regardless, you don't pay taxes on expenses anyways. IANAL.
- ajsnigrutin 5y agoYou've received something with a monetary value, so it's (maybe?) counted as revenue. If it's taxed, and you don't actually use it, you'll be paying tax on something that you don't need.
- tedk-42 5y agoNot quite revenue, if you're already hosting your app on AWS and paying AWS for that, those expenses decrease. But in no way are AWS giving away money so to speak. They are trading their commission from your app for compute they can offer
- ajsnigrutin 5y agoI think a tax lawyer would have to answer this, and that it probably depends on the country. In my country, I (even if "I" means a company) can receive a business gift with a maximum value of 42eur, twice per tax year from one company - everything above that is taxed. Let's say i did some work for a local store and charged them 2000eur for my work. To do my work, I had 1000eur of expenses. I pay tax on 1000eur difference. With eg. 20% income tax, I'd have 800eur of profit. (yes, a bit simplified, I know) Then they decide to give me a 200eur coupon for their store and give it to me (to my company), and this is counted towards my income (2200eur now). If i actually need stuff from their store, I use it, so now I earned 2200eur gross, spent a 200eur coupon in their store and 800eur anywhere, I have 1200eur of profits, and even after tax I earn more than I did before - with 20% income tax, I'd have 960eur of profit in cash form. On the other hand, if I don't need their services, and can't sell the coupon to someone else, the situation is different. I still got 2200eur of income (2k+200eur coupon), spent 1000eur in other stores, get taxed on the 1200eur, technically still have 960eur of profit, but 200 of those are in a form of a worthless coupon, and only 760 in cash - so their usless coupon is actually costing me 40eur.
- ezekg 5y agoAWS gives out thousands of service credits to new US-based startups for free, so I'd find it hard to believe that those companies would be getting taxed for such a thing. I don't think those credits are taxable, in the US at least, because they are non-transferable, i.e. you can't redeem them for fiat currency.
- conductr 5y agoThe way I’d understand it is you should claim the income but only the portion that offset your expenses thus a net zero and no tax liability. For example, Amazon give you $100,000. When you use only $1,000 you claim $1,000 income and $1,000 of expense. The other $99,000 is like a loan balance that hasn’t transferred to you or been “realized” and is therefore not taxable and shouldn’t even be reported afaik
- 5y ago
- junar 5y agoSounds like at least Amazon doesn't view this as taxable income. > 3. You may not sell, license, rent, or otherwise transfer Promotional Credit. Promotional Credit may be applied only to your own AWS account. Promotional Credit has no intrinsic value, is not redeemable for cash, has no cash value, is nonrefundable, and serves merely as a means to provide an incentive to use our Services. Promotional Credit may not be purchased for cash, and we and our affiliates do not sell Promotional Credit. https://aws.amazon.com/awscredits/ https://aws.amazon.com/awscredits/ I speculate that this may be classified as a no-additional-cost service under the tax code. https://www.irs.gov/publications/p15b#en_US_2021_publink1000193734 https://www.irs.gov/publications/p15b#en_US_2021_publink1000...
- londons_explore 5y agoI don't think it matters either way... If it was cash spent on AWS, it would be a business expense and the total amount given to the taxman would be the same by all parties right?
- conductr 5y agoMisreporting income is not a great idea even if it doesn’t change your tax liability. That said, I think of the “credit” as an elaborate discount or coupon system. Any CPA worth their salt could find a justification for why it’s not income.
- pbreit 5y agoPretty sure it's 10% of $100 and so according to Amazon "This brings total program benefits up to an equivalent of 90 percent of revenue."