According to a July 2011 article by ASCAP contributor Chris Castle, Kickstarter monies are likely to be taxable for many artists.
Castle's analysis starts with the presumption that you aren't a non-profit and that you have entered into some kind of contract with your contributors, like, "If you give us money, we'll give you X ." Castle believes that as a result of entering into this contract, you may owe self-employment tax, sales tax, and other taxes.
Castle's analysis starts with the presumption that you aren't a non-profit and that you have entered into some kind of contract with your contributors, like, "If you give us money, we'll give you X ." Castle believes that as a result of entering into this contract, you may owe self-employment tax, sales tax, and other taxes.
For some artists, all this comes as an unhappy surprise.
Artists need to keep the possibility of heavy taxation in mind not just when tax deadlines come around, but right at the outset when setting their Kickstarter goals.
If an artist promises a set of rewards based on the belief that they get to keep 100% of the monies, but then later discovers that they owe the IRS a big cut, Kickstarter runs the perverse risk of costing a group more than they raise!
Artists are strongly advised to speak to their tax advisors both before and after they participate in Kickstarter.
Artists need to keep the possibility of heavy taxation in mind not just when tax deadlines come around, but right at the outset when setting their Kickstarter goals.
If an artist promises a set of rewards based on the belief that they get to keep 100% of the monies, but then later discovers that they owe the IRS a big cut, Kickstarter runs the perverse risk of costing a group more than they raise!
Artists are strongly advised to speak to their tax advisors both before and after they participate in Kickstarter.
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