I Ran a successful crowdfunding campaign, How do I need to file it for tax purposes?

I Ran a successful crowdfunding campaign, How do I need to file it for tax purposes? -

In the "you got this" weekly series, we will answer a question of our customers are on Facebook, Twitter , Blog TaxACT and around the web

issue :.

I ran a successful crowdfunding campaign last year for medical needs (service animals) for my disabled daughter. It would not be covered by insurance. It is a long process and we paid a part in certified training company already. How do I file it for tax purposes?

I'm sure I have to file as income, but with it being a there is medical need can deduct the amount we have already paid?

answer

crowdfunding has become a popular way for people to raise funds to finance a new business, an idea, or, you know, help pay for personal causes.

popular sites like Kickstarter and GoFundMe Crowdfunder easy to crowdfunding.

at the end of 2014, the IRS has not issued guidelines on how to process donations made to individuals and will consider donations on a case by case basis.

at this time, donations to an individual are considered taxable income if they are not grants, loans or equity investments.

If you used a website to raise money for a personal cause such as paying medical bills for your pet or send your child to summer camp, these donations are considered a gift as long as the donor receives nothing in return.

For example, if someone donates $ 100 to you and get nothing in return, the $ 100 is a non-taxable gift.

However, if someone donates $ 100 for you and you give them a gift worth $ 20 in return, then your non-taxable gift is $ 80

If the gift is a gift, a gift tax may apply. however, the person liable for the tax on donations would be the donor, not you as the recipient.

In 2014, a donor can give up to $ 14,000 without being subject to the gift tax.

If you crowd funding to raise money to start a new business and someone donated money in exchange for shares in your company, donations are considered investments or " capital contributions. "

in this case, it considered taxable income and you must report on your return.

on the other hand, if someone donated money but received no equity in your business, it is considered taxable income that must be reported on your return.

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