1099 Reporting for Crowdfunding and Online Fundraising

Crowdfunding platforms like Kickstarter, GoFundMe, and Indiegogo have opened new doors for entrepreneurs, nonprofits, and individuals. But along with the funds raised comes a complex question: how do you handle IRS 1099 reporting? The IRS increasingly monitors crowdfunding and digital payment platforms, and failure to comply can lead to penalties. At 1099FIRE, we provide both software and outsourcing solutions to make 1099 reporting for crowdfunding simple and compliant.

When Does Crowdfunding Trigger 1099 Reporting?

Not all crowdfunding campaigns are taxable, but many are:

• Business fundraising – If funds are raised for a business or commercial project, amounts over $600 per backer may require Form 1099-K (issued by the payment processor) or Form 1099-MISC/NEC (if you directly paid contractors or partners).
• Reward-based campaigns – If backers receive goods, perks, or services in exchange for contributions, the IRS may classify funds as taxable business income.
• Charitable fundraising – If the campaign qualifies under a registered nonprofit (501(c)(3)), contributions may be tax-deductible and exempt from 1099 reporting.
• Personal gifts – Pure gifts (no goods, services, or business purpose) are usually not taxable to the recipient, but payment processors may still issue a Form 1099-K if thresholds are met.

IRS Crackdown on Payment Platforms

Since 2024, platforms like PayPal, Venmo, and crowdfunding sites must issue Form 1099-K for aggregate payments over $5,000 (with a plan to eventually drop to $600). This means many fundraisers will start receiving 1099-K forms even if they weren’t expecting them.

What This Means for Campaign Organizers

• You may receive a 1099-K from the payment processor if thresholds are met.
• If you use funds to pay contractors, freelancers, or vendors, you must issue Form 1099-NEC to each payee who receives $600 or more.
• You must track contributions carefully to distinguish between gifts, donations, and taxable income.