Crowdfunding and Taxes for Recipients

Part 1 of a two-part series.

As covid-19 has shuttered or slowed businesses and the uprising for human rights in the wake of George Floyd’s murder has prompted an outpouring of mutual aid in cities across the US, many people are using crowdfunding who have never used it before.

Recipients often wonder if the support they receive is taxable. The answer depends on what kind of transaction you’re participating in.

A model of the kinds of crowdfunding (donations, gifts, purchases, loans, and equity) anchored on an image of a crowd protesting the police murder of George Floyd.
The five types of crowdfunding transactions are donations, gifts, purchases, loans, and equity. Gifts are the most common transaction in an emergency.

Before we go any further, please consider supporting the Du Nord Recovery Fund, which will ensure that POC-owned businesses on Lake Street in Minneapolis will be rebuilt.

Now, on to the tax implications of crowdfunding. The main question you should ask yourself is: Am I offering anything in return for the contributions I receive?

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