The IRS recently updated information on its website concerning whether or not a Form 1099-K, Payment Card and Third Party Network Transactions, is required to be filed with the IRS and issued to the one receiving the funds from a crowdfunding campaign.
The crowdfunding website or its payment processor may be required to report distributions of money raised if the amount distributed meets certain reporting thresholds. Prior to 2022, the threshold for a crowdfunding website or payment processor was when the total of all payments distributed to a person exceeded $20,000 in gross payments resulting from more than 200 transactions or donations.
For calendar years beginning in 2022, the threshold is lowered and is met if the total of all payments distributed to a person exceeds $600 in gross payments, regardless of the number of transactions or donations.
The new IRS update clarifies that the crowdfunding website or its payment processor is not required to file Form 1099-K with the IRS or furnish it to the person to whom the distributions are made if the contributors to the crowdfunding campaign do not receive goods or services for their contributions.