Tuesday, August 14, 2012

Even Crowdfunding Cannot Escape From Uncle Sam

From here:

When it comes to crowdfunding, most people forget that there are tax implications. Did you really think Uncle Sam would give you a pass? Everyone who raises money through crowdfunding will be taxed as it is considered revenue. There is one exception to the rule, however, and that is either you are a registered non-profit 501(c)(3), or you have secured an authorized fiscal sponsor to chaperon your fundraising campaign. So when you do plan your crowdfunding campaign, check to see if you would be eligible for a tax-exemption.

Basically, there are three taxable ways money raised in crowdfunding can be categorized: Sales Tax, Income Tax, or Gifts.

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