2024-09-04
Crowdfunding website or its payment processor may be required to report distributions of money raised by filing Form 1099-K, Payment Card and Third Party Network Transactions, with the IRS if the amount distributed meets certain reporting thresholds:
- Calendar years 2023 and prior – Form 1099-K is required if the total of all payments distributed to a person exceeded $20,000 and resulted from more than 200 transactions; and
- Calendar year 2024 – The IRS announced a plan for the threshold to be reduced to $5,000 as a phase-in for the lower threshold provided under the ARPA.
If he recipient does not report non-taxable distributions that are reported on Form 1099-K on their tax return, the IRS may contact the recipient for more information.
Crowdfunding contributions made as a result of the contributor’s detached and disinterested generosity and without receiving or expecting to receive anything in return may be gifts and therefore may not be includible in the recipient’s gross income.
Employer contributions to crowdfunding campaigns to or for the benefit of an employee are generally includible in the employee’s gross income.
Crowdfunding money raised to the organizer may not be includible in the organizer’s gross income if the organizer solicits contributions on behalf of others and distributes the money raised to those for whom the crowdfunding campaign was organized.
More information is available to help taxpayers determine what their tax obligations are in connection with their Form 1099-K at Understanding Your Form 1099-K.