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Subscribe03 SEP 2024 / IRS UPDATES
The IRS recently released a fact sheet (FS-2024-28) addressing the tax implications of crowdfunding distributions—a hot topic for those guiding clients through this increasingly popular fundraising avenue. Here’s the key takeaway: crowdfunding income might be taxable, and distributions could trigger reporting requirements depending on the facts and circumstances. As a professional, staying ahead of these updates will help you navigate the complexities for your clients.
Crowdfunding platforms or their payment processors may need to issue Form 1099-K if distributions meet reporting thresholds. Previously, this form was only required if distributions exceeded $20,000 and involved more than 200 transactions. However, beginning in 2024, this threshold will be reduced to $5,000 as part of a phased plan under the American Rescue Plan Act (ARPA). This significant change means more clients could find themselves receiving a Form 1099-K, even if their campaigns are modest.
By staying informed on these updates, you can better guide your clients through the complexities of crowdfunding income and reporting obligations, ensuring they’re not caught off guard when tax time rolls around.
Until next time…
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