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Phillip B, EA
Phillip B, EA, Enrolled Agent
Category: Tax
Satisfied Customers: 704
Experience:  Practicing since 2004. Expert in 1040, small business, represent vs. IRS, & int'l tax mattters.
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What would the tax implications be, if any, for someone who

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What would the tax implications be, if any, for someone who has a project funded on one of those crowd-finding sites, like Kickstarter or Indiegogo? Let's say that the person running the project is not doing it related to a business, but rather just to do a fun project. If there is no business involved, what kind of tax implications are there?

Thanks for using! I will do my best to answer your tax questions clearly and concisely, based on the information that you have provided.

The funding that you have received is hobby income. You will claim the income as other income on line 21 of your income tax return. You can deduct expenses related to the hobby as a miscellaneous itemized deduction on schedule A up to the amount of your hobby income.

For example, your funding was 10,000 dollars and you have 12,000 dollars in project related expenses. The full 10K is taxable other income, and you can deduct 10,000 dollars as an itemized deduction. The 2K left over is non-deductible.

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