We want to make sure that our incredible creative community, who have crowdfunded their projects in the previous year, has all the information they need to prepare and report their financial information as tax season approaches.
We’ll go over typical tax queries about using ApnaCrowdfunding to raise money for your project in this post. This is designed to be used as advise for your accounting professional, not as a substitute for or substitute for US-based financial or legal counsel.
101 of ApnaCrowdfunding
ApnaCrowdfunding creators provide their projects a budget and a due date. Backers may pledge funds to help the project if it receives sufficient support. All backers’ credit cards are paid if the project meets its funding target by the deadline. No one is billed, though, if the initiative doesn’t meet its financing target. ApnaCrowdfunding charges processing fees and deducts a 5% fee from the cash collected if a project is successfully financed.
For a variety of reasons, backers donate funds to ApnaCrowdfunding initiatives. While some supporters are helping creators they have long loved, others are supporting the projects of their friends. While some are only motivated by a novel concept, others are enticed by the project’s benefits, including a limited edition, a copy of the final product, or a unique project-related experience.
The fact that project founders retain complete ownership of their work should not be overlooked. ApnaCrowdfunding cannot be used to seek loans or to give equity or financial rewards. Backers support projects to help them come to life, not to profit financially from them, even if some projects financed on ApnaCrowdfunding may end up making money.
Our FAQ contains additional information about ApnaCrowdfunding and its operation.
How do ApnaCrowdfunding taxes operate?
Although we are unable to provide tax or legal advice, we have put together this information for financial experts in the US who might not be familiar with ApnaCrowdfunding.
Any taxpayer is not permitted to use this information in order to (1) evade penalties relating to taxes under the US Internal Revenue Code or (2) sell, promote, or advise any party on any tax-related topics. This is only the beginning.
Generally speaking, money obtained through ApnaCrowdfunding is regarded as income in the US.
In January of the year after their project was successfully financed, creators who surpass the IRS-mandated threshold—currently $20,000 in gross volume annually and 200 transactions, though this year it is expected to alter again—will get a form 1099-K from ApnaCrowdfunding. This help centre article has further information.
Depending on municipal regulations, sales tax may also be applied in some situations. In the states where the supporters reside, a creator could be required to register, collect, and remit sales taxes. In any state where they reside or spend a significant amount of time, the author may also be required to register, collect, and remit sales taxes.
Please contact your local tax authorities if you are a project developer from outside the United States:
- Link: https://www.hmrc.gov.uk; United Kingdom
- http://www.cra-arc.gc.ca in Canada
- https://www.ato.gov.au/Australia
- http://www.ird.govt.nz New Zealand
- http://www.belastingdienst.nl/wps/wcm/connect/bldcontentnl/belastingdienst/prive/, Netherlands
- http://www.revenue.ie Ireland
- http://www.skat.dk Denmark
- http://www.skatteverket.se Sweden
- http://www.skatteetaten.no Norway
- Germany: home_node.html (http://www.bzst.de/DE/Home)
- http://www.impots.gouv.fr/portail/ France
- www.agenciatributaria.es/AEAT.internet/Inicio.shtml Spain
- http://www.agenziaentrate.gov.it/wps/portal/entrate/home Italy
- https://www.bmf.gv.at/ Austria
- Luxembourg: http://www.impotsdirects.public.lu/ Switzerland: http://www.estv.admin.ch/ Belgium: http://financien.belgium.be/nl/
- https://www.iras.gov.sg/irashome/default.aspx Singapore
- http://www.ird.gov.hk/index.htm Hong Kong
- [http://www.sat.gob.mx/Paginas/Inicio.aspx] For Mexico
- Poland: https://www.podatki.gov.pl/ Greece: https://www.gsis.gr/en/ Slovenia: https://www.fu.gov.si/en/ Japan: https://www.nta.go.jp
The 1099-K Form: What is it?
Each year, ApnaCrowdfunding is required by the US IRS to submit a 1099-K form (additional information can be found in this help centre page) for every Stripe account that satisfied all of the following requirements during the preceding calendar year:
The bank account and verified entity (person or corporation) of the project author are located in the United States.
A total gross volume of over $20,000 USD AND over 200 charges
The 1099-K is a completely informative document that helps you with tax filing by providing a summary of your account’s sales activities. It is made available to you, the IRS, and some US states.
Visit IRS.gov to learn more about your 1099-K. A blank sample of the 1099-K form is also available for download here.
States with less stringent standards
The list varies, and some states have criteria that are lower than the federal threshold.
A current list is available at this Stripe page.
If you received a 1099-K Form after processing $200 transactions or less and $20K
For every distinct tax identification number (TIN), such as an Employer Identification Number (EIN) or Social Security Number (SSN), that satisfies the IRS processing threshold, you will be issued a 1099-K form. The following might be the reason you didn’t anticipate receiving a 1099-K: You have two or more accounts with the same TIN, one of which is below the IRS threshold. A 1099-K will be given to each.
When you merge two or more accounts with the same TIN, the IRS threshold is reached even though none of them alone exceeds it. A 1099-K will be given to each.
The state in which your company is located has lower minimum filing requirements than the federal level.
What effects does utilising ApnaCrowdfunding have on taxes?
In most cases, taxes are imposed on funds obtained through ApnaCrowdfunding. The deduction of project-related expenditures is one of several factors that might affect how much you owe. We strongly advise speaking with a tax expert or accountant. They can help you navigate your unique tax situation in the most beneficial manner.
We have put up a guide for financial experts who might not be familiar with ApnaCrowdfunding, even though we are unable to provide tax advice.
Can I deduct my pledge from my taxes?
No, generally speaking. However, there may be tax benefits available for some US initiatives initiated by or in collaboration with a 501(c)(3) organisation. If so, the project page will make note of this. Please get in touch with the project author directly if you have any issues concerning tax deductions.