The IRS recently warned taxpayers that money received through online crowdfunding — such as soliciting to fund businesses, for charitable donations or for gifts — may be taxable.
The crowdfunding website or its payment processor, the IRS said, may need to report distributions of money raised if the amount distributed meets certain reporting thresholds by filing Form 1099-K with the IRS.
With the significant drop in the threshold to file Form 1099-K in 2022 (from $20,000 down to $600), many more crowdfunding groups may receive a Form 1099-K this year.
The American Rescue Plan Act clarifies that the crowdfunding website or its payment processor is not required to file Form 1099-K with the IRS or furnish it to the person raising funds if the crowdfunding donors do not receive goods or services for their contributions. Read more.