I finally bought Unity Pro ... and am getting it for free

Well folks, after much sour-graping and wishing and hoping, I finally went ahead and bought Unity Pro today. Time for a celebration!

Part of the reason I went for it after all this time, apart from its awesomeness, is that I had a discussion with my accountant. I asked about whether software counts as a business expense. He said yes. If I am using Unity for 100% business use (and I am an official LLC business in the USA), I can claim 100% of the price of the software in the next tax year. An alternative is that if you use Unity only partly for business and partly for other purposes, you can claim at least a portion of its price on your taxes deprecated over 5 years (thats what I did with the price of my computer). So basically, and I wish I did this in December so I could have this happen already, when the next tax year rolls around I get a $1500 refund because Unity is a business expense.

Now obviously you gotta have the money up-front to pay for it. If you are thinking about taking this approach also, you could e.g. get a loan near to the end of the tax year, buy Unity, claim it on your taxes the next Spring, and get refunded within a few months to pay the loan back.

So anyway, I had $1500 available (thanks to all you asset store purchasers) so decided to invest. Getting my money back later is an added bonus, but I feel Unity Pro is a really powerful piece of software and worth the price. I also feel that owning it is a motivation in itself to do something great with it.

Anyway... still celebrating this sudden shift from Free territory to Pro territory. It's like a whole new way of thinking! :-D

 

Wow, sadly many indie game developers in other countries are in a big disavantage compared with EEUU developers, if you think that in many countries the Per Capita Income is a fraction of the income of the EEUU people then for this developers pay Unity Pro is near to imposible (and in almost of this countries not exist the taxes refund figure). Well, we will continue work with Unity Free or maybe a "us$19 option".

 

Wait... Wait wait wait wait wait... do you need to have an LLC to do that? Oh... Oh Sweet Jesus.
$#%@ing TurboTax!
Ah, I think I'm gonna barf and pass out now.

 

Yeah then when unity 5 comes out, render textures are free, just to piss you off

 

Se... Seriously, though. Do you really need an LLC? Heh...heheh...
*Arms now around knees, rocking in a corner*

 

Do I not understand taxes or something? My understanding of business tax write-offs is that legitimate expenses can be deducted from your taxable income, but it's not as if you're getting reimbursed for that amount.

So let's say I make $100,000 a year (I don't). If I have $10,000 worth of business expenses, including a new computer, Unity, whatever, my taxable income is $90,000 for the year. This may put me in a lower tax bracket, reducing the amount of taxes I owe, and depending on how much my employer has already deducted from my paycheck, could increase the amount I receive on my tax return.

Is this not how things actually work?

 

That is how it works, I'm pretty sure. It isn't free.

 

This is more accurate it's not really free unless you cross a tax bracket which would drop your taxable % for your entire income for the year (i.e. if it lowers your income from a 25% tax bracket to a 15% tax bracket on your whole income). When you don't cross a tax bracket you are only saving the percentage of the tax bracket your in (ex. 15% for that tax bracket).

 

This would also apply for an S corporation with the disclaimer above that it's not really free unless you cross a tax bracket (and depending on which you cross it might actually make you money obviously the 25% to 15% border is quite large). Another thing to note is it's not the only vehicle for reducing income (you can take distributions also) so it's not always necessary to buy an expense to cross a tax bracket. Obviously, this is for U.S. tax jurisdictions.

I am NOT an accountant and there are many rules to follow so unless your willing to put in a lot of research its always prudent to consult with an accountant in your area.

 

So since my work is not in any way incorporated, very bad things are coming... The forms I went through mentioned nothing at all about that.
Can, uh... can I somehow... fix that?

 

The main reason for indie developers to form a corporation or LLC is the liability protection. If you get sued and lose you don't want them to take your house, car, etc. Obviously it costs money to create a company, usually a couple hundred dollars depending on the state and then around a hundred dollars a year for the annual report.

As far as if you weren't a company and want to become a company you can always create one but it won't have any bearing on the past tax year if that's what your asking. In general though the main purpose of creating a company is the liability not the taxes for indie developers.

 

Congratulation on Unity Pro - it's good to invest in yourself and your business.

To be on the safe side i would research the 100% off thing. Its usually what these guys said, so if you make 35000$ next year in business, you'd pay income tax on 35000$ - 1500$ for unity, so a percentage of 33500$. not trying to throw cold water on your excitement, but i worked my way out of debt and its better to be safe than sorry.

Now get to work on some new pro Unity stuff

 

Talk to an accountant.

My experience (California) is you get to write off the same being an S-Corp, LLC, Sole Proprietorship, or Partnership. Incorporating has more legal protections and you can do things like pay yourself a smaller (reasonable) wage and pay out the rest in bonuses (which don't pay payroll taxes). There are other differences of course, but you should be able to deduct business expenses pretty much the same way. Sucky thing about California is it almost $1000 dollars a year to incorporate so, you need to have steady income from it for it to make sense (or need the legal protection).

 

Depends on where you live. I spoke to my accountant and he says as long as you are an individual paying taxes on the income it generates you can in deed deduct the price of the software and even the hardware if that's all you use it for. Pretty much anything you put into making a little money will be deductible. At least in my state and/or city.

 

You're right, actually... it removed a certain chunk from my taxable income, it's not really a $1500 refund. However, since my income right now, for a business, is very small, this is quite a large percentage. It maybe will save me a few hundred $ in taxes overall. I was mistaken to say it was a total refund, or to lead you on to think you can do the same... my misunderstanding of what my tax guy meant, lol ... anyway... that was only part of the reason for the purchase, I am still glad to have spent the money. Now I have lots of new features to learn about!

 

lol you got that right... but its ok.

 

Yeah I love pro for everything else much, much more. People doing games on free don't understand the extra value. Because their projects are usually tiny and don't make use of the extended goodies unity provides in pro. One of which is the almighty profiler. That thing is so useful it's not even funny.

Not to mention extended features for loads of other stuff which I use, substantial time savings for medium to large projects, plus dll plugins for unicorns and butterflies.

Also, I have no idea about the feature split for 5. I'm just winding you up because you need it after going pro

 

I don't think that's correct either. That's definitely not how it works in Canada and I'd be surprised if that's how it works in the US. Your entire income is not taxed at a single rate if you cross a tax bracket. If the bracket threshold is, say $100,000, and you make $150,000 then using your example tax rates, your first $100,000 gets taxed at 15% and your remaining $50,000 gets taxed at 25%. That's how personal taxes work. Corporate tax has more complicated adjustments, deductions and rules but it follow the same basic idea that the first X dollars are taxed at one rate and the rest is taxed at another rate. You don't cross a threshold by a dollar and end up paying a whole bunch more tax because of it.

 

Are they really gonna be in Unity Indie? Or was that just a figure of speech just to piss some people off LOL?
That's a big reason I decided to get Pro was the Image Effects. (I think their the same thing?)

 

That's awesome! Shame i'm to poor to pay tax

 

This is true at least in my part of the world. I'd be incredibly surprised if it wasn't true in the states as well. For all my the things the US does wrong, they do tend to do things well when it comes to individual economic gains.

 

Chances are you will save only a small fraction of the $1500 on taxes. Not anywhere near "free".

 

I don't know anything about taxes in US, but as far as I understand, your accountant just helped you not pay taxes from the $1500 you spent on Unity. So, instead of paying $1500 + x% tax, you just paid $1500. So saying that you got it for free, is kind of an overstatement. I believe you didn't get even a $1 discount.

 

Not entirely true what it does is reduce income which would normally be taxed at a certain rate. In effect he paid for the item in pre tax dollars so it saves your effective tax rate. The sales tax is something else entirely.

And as others had mentioned earlier they are correct I had my tax bracket understanding wrong. The effective tax rate is graduated so your first x dollars of income is taxed at a lower rate than your next x dollars. Lowering your income across brackets does not decrease the tax rate on your whole income it just reduces the income a bit. If your income is high the percent you save is higher though since you would be taxed at a higher rate for that income.

 

My dad runs a Sole Proprietorship, and which is of course different than an LLC.
But I know with him, you have to pay (safely) 40% of all income is taxed at the end of the year.
I say safely because it's 30 something percent but not higher than 40.

Then, the IRS takes a percentage of everything you spend and chances are you still have to pay taxes at the
end of the year, because roughly 40% of all his income is taxed.
My dad has never not owed anything and that's with him buying 40 thousand dollar tractors, new trucks, etc.
Even with mileage deductions, lunch allocation, etc. he still owes 10 grand minimum every year after making roughly 100K a year.

 

Yeah, sorry, my math glitched Let's try this again. If we simplify this and assume there's only one bracket, and that his income tax is 25%, then I believe he saved 25% of Unity's $1500, which is $375. Is that right?

 

Let's all just agree that any type of discount, tax break, or extra money in your pocket is a good thing, and consider this thread a reminder to anyone developing games commercially to remember to claim it on your returns appropriately.

 

Indeed. And not just unity, also assets, other software, hardware and even home office furniture. Also things like apple developer costs. In some cases you can even claim a portion of your rent/mortgage if your home is your office. It's not going to be massive, but every little bit helps.

 

Something like that, lol

 

Yah the Unity pro profiler is seriously totally awesome and incredible useful, I already spotted a major script hog that I didn't even know was happening. And then there's the render textures :-D ahhhhhhh

 

Let us know how this all turns out at the end of the year when you find out you didn't spend enough to get the deduction.

 

You don't get $1,500.00 on your tax return.
You get to remove $1,500.00 from your gross taxable wages, thereby reducing your tax liability marginally.
So whatever you would pay in federal income taxes on $1,500.00, you will not have to pay that amount.
I would guess that this will mean not owing the government about $400.00, subjective to infinite factors specific to you and your individual set of circumstances.
The thing is, if this amount was never deducted by the government from your payroll, they won't have any money to give back to you at all. You'll just end up owing them less than normal. And, $400.00 over the course of the year is $33 a month, or a little more than a dollar a day.
Could have saved that much by skipping soda at lunchtime, or cheaper toilet paper. Up to you.

And besides, you're likely already maxing out your deductions and returns. This won't change much.

I know, I know... I suck the air right out of the room. Ignorance is bliss, so I'm the opposite of that.

 

You might even be able to put video games down as an expense as it counts as business research. I was told this by someone from HMRC (the UK tax office) while on one of their courses.

HMRC does a series of free 2 hour courses on the various aspects of self employed tax. They have these courses at local tax offices and are well worth going to if you are in the UK (unless they have stopped them now).

 

Spent a little time listing it in the hopes of making $33 per month? That's likely better return for investment of time than an actual game.

 

Or you could enjoy the $33 off your taxes this coming year and spend the $33 you save not buying soda or expensive toilet paper on a nice sushi treat or a gourmet pizza or a night at the movies with your kids.

It is all how you look at it, you know?

 

As for company formation, the tax writeoff is pretty much the same regardless of the type.. Though some such as corporation or even scorp may require you to use the depreciated calculation for writeoff. You could do the same for sole proprietorship or even without an established business if you self employ using your SSN. The LLC offers protection against damages. It designates the business as an entity and removes your personal liability (in most circumstances, such as normal daily business operations). If you were to be sued for something caused by the business, you are only liable for the value of the business and they cannot come after your personal assets.

 

Well for some people, they see their tax refund as "free" money -- which I can see why people think that. I mean, really it's not free money. It just means the government took out more in taxes throughout the year than they should have or needed to, and now they're simply giving you your money back that you should have had months ago (or throughout the last year).

For some people, the gov't taking out too much money is basically a good savings plan for them lol. So, you still need to have $1500 in one way or another in order to buy Unity Pro. And there's still no such thing as a free lunch. lol

But I totally get where imaginaryhuman is coming from

 

Mostly true. Some countries (like mine) have a tax system where incredibly low income earners pay negative tax (essentially free money). It still leaves you worse off then making a high income. But it can help out dramatically while just starting out.

 

Interesting. Ya I guess I was mainly speaking from my own countries perspective. Woops lol.

 

Yes and no... Let's say his income is taxed at 30%. So, 30% of $1500 is $450. He doesn't actually get a refund of $1,500... but his pre-tax income is adjusted by $1,500... so that's $1,500 less that he'll have to pay taxes on. In essense it is $450 of free money (probably less actually but you get the point). Yes he had to spend $1,500, and paid $450 less in taxes... but he gets something of $1,500 value.

 

You might want to watch 'Inequality for All'.. It's on netflix streaming.

 

Sure Netflix. That will work for me... I might go try find a torrent or a YouTube copy.

Debating competing economic polies is well outside the scope of this forum. Suffice it to say I wasn't indicating I believe that US has it right. Simply that the US system is built to allow individuals massive scope for personal gain.