Crowdfunding platforms, such as Kickstarter, open a whole new world in business financing, but can end up being a confusing world for tax purposes. The proceeds aren’t like sales in the traditional sense, and the people who contribute are not stockholders. So, how should you handle income from a crowdfunding project?
It’s important to report crowdfunding income correctly, or the IRS is likely to make sure you do.
Here’s what you need to know to stay out of trouble with the IRS – and other taxing authorities.