Crowdfunding management need to know how it gets taxed

Whether these funds are taxable depends on the legal structure of the campaign and your role. **Taxability of Income:** If you are collecting money for a specific individual (like a medical fund or a gift), the IRS generally treats these as non-taxable gifts. However, if the platform issues a 1099-K in your name, the IRS will expect to see that income reported. You would typically offset this by showing the funds were distributed to the intended recipient, resulting in $0 net taxable income. **Charitable Write-offs:** You **cannot** claim a charitable deduction for these funds unless they are paid directly to a 501(c)(3) qualified organization. Giving money to individuals or non-registered groups, no matter how noble the cause, does not qualify for a tax deduction. **Tax Reserve:** If the $12,000 net income is considered self-employment income (and not non-taxable gifts), you would owe approximately 15.3% in self-employment tax ($1,836). Since your total income is below the standard deduction ($14,600 for 2024), you likely wouldn't owe federal income tax, just the self-employment tax. If the money is truly a pass-through for gifts, you should owe $0. Keep meticulous records of all distributions.