Crowdfunding income

Crowdfunding is a term that describes the act of facilitating the collection and distribution of money to support projects that are created by other people, businesses or organizations. Project creators often use a third party website to solicit monetary contributions from the public. The project creator typically receives the contributions only after the project’s funding goal has been met.

A photographer’s gross income earned from crowdfunding pledges is generally subject to B&O tax and/or sales tax according to the rewards that are given to contributors. For example: when a contributor receives a poster in exchange for a $25 pledge, that $25 of income received by the photographer is subject to Retailing B&O tax. The photographer must also report this amount on the retail sales tax line of their return.

We recommended that photographers earning income from crowdfunding projects contact the Department in writing (see “Tax Rulings” below) for specific written instructions on how to report their income. Reporting obligations will vary depending on the project and type of rewards.