Crowdfunding and Taxes

As today is tax day, it seems somewhat appropriate to discuss taxes.  But I want to discuss a little-known tax issue that may become a big issue, either currently or in the future, for some of our readers.

Crowdfunding is a growing funding resource for many farmers and ranchers just starting out.  Crowdfunding is when a person or organization makes a pitch for funding on an Internet platform such as Kickstarter, Barnraiser, or many others (see a comprehensive list here).  The general idea is to have a lot of small donations from your “crowd” to fund a project.

But is there a potential downside?  Yes, from a tax perspective there could be.  According to this New York Times article, IRS rules require companies that process payments for crowdfunding sites to send a 1099-K form to any customer for whom they register 200 annual transactions totaling at least $20,000.

As the Times points out, this a tax issue that could be compounded by timing.  If the crowdfunding occurs in a year with little to no business expenses to offset the generated income, there could be a greater than anticipated tax bill due.

But there is also the state tax angle, more specifically, sales tax.  Sales tax varies state-to-state and, in some cases, situation to situation.  Generally speaking, however, sales tax is due for anything sold to an in-state buyer.  Sales tax is applicable regardless of the number of donors or amount raised.

In sum?  Crowdfunding may be a wonderful opportunity for your farm.  But be aware of the potential tax implications before jumping straight into a fundraiser.

Friday Facts, Fun and Food

I’ve been driving around Nebraska this week and I have to say — I love fall.  The crispness in the air, the harvest coming in, fresh apples.  But winter feels like it is rapidly approaching.  Before winter happens though, some possible items to keep you warm:

Friday Facts, Fun and Food

Well, it seems that my area of the world has entered monsoon season.  Rain is great, until it isn’t, right?

The USDA is launching a pilot for forage insurance plan.

Expect a survey in the mail from the USDA about crop and livestock production.

Here is a lengthy list of Apps for Agriculture.

This was discussed earlier in the week but there is new information on the demographics of beginning farmers.

Curious about crowdfunding as a way to jump-start your operation?  I’d recommend this story.

Goat causes car accident as it escapes slaughterhouse.

And, as I have been enjoying this cool weather, try a Spring Beef and Vegetable Stew.