If you are raising money via crowdfunding, do you need to pay taxes? The tricky question is how do you define income from a crowdfunding campaign? You might try to define income as a donation in order to avoid paying taxes. Unfortunately, I don't think this works. Any money derived from an investment effort leading to the delivery of a commercial product is typically taxable, since Federal and State entities see this revenue as ‘income.’ As a result, any ‘project’ in this category is going to be levied at prevailing tax rates, whether it is offered as art, technology, or manufactured goods. No matter you want to manufacture a bike, make a movie, or create a video game, you need to pay taxes. The only exception is Non-Profit (NP) or Non-Government Organization (NGO), and you need to get recognition from the IRS for these. Of course, taxes are based on income. The cost of reward fulfillment can be considered an expense. My suggestion is to recognize the cost of reward fulf...
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