Quick Answer
Money from GoFundMe is typically not taxable if it's a gift for personal causes, but Kickstarter income is usually taxable business income. The IRS considers crowdfunding taxable if you provide goods/services in return or if it's for business purposes. Personal gifts on GoFundMe are generally tax-free to recipients.
Best Answer
Alex Torres, Gig Economy Tax Educator
People with day jobs who use crowdfunding to launch side businesses or creative projects
How crowdfunding income is taxed depends on the purpose
The tax treatment of crowdfunding money depends entirely on why you raised it and what you offered in return. The IRS doesn't tax based on the platform you used — it's about the nature of the transaction.
GoFundMe campaigns are usually gifts (not taxable) when they're for personal causes like medical bills, emergencies, or memorials. Kickstarter campaigns are usually business income (taxable) because you're pre-selling products or services.
Example: $15,000 raised on different platforms
Let's say you raise $15,000. Here's how it would be taxed:
GoFundMe for medical bills: $0 taxable income. This is a gift to help with personal expenses.
Kickstarter for your app idea: $15,000 taxable business income. You promised backers early access to your app — that's a business transaction.
GoFundMe for your business startup: $15,000 taxable business income. Even though it's GoFundMe, you're raising money for business purposes.
The key factors the IRS considers
Comparison: GoFundMe vs. Kickstarter tax treatment
What you need to track for taxes
If your crowdfunding is taxable business income:
For a $15,000 Kickstarter campaign with $1,200 in platform fees and $3,500 in fulfillment costs, your taxable profit would be $10,300. If you're in the 22% tax bracket plus 15.3% self-employment tax, you'd owe approximately $3,842 in taxes.
Common scenarios that trip people up
"Donations" to your business: If people give money to help your business (even if you call them donations), it's taxable income.
Reward-based campaigns: Any campaign where backers get products, services, or perks is taxable business income.
Multiple campaigns: Each campaign is evaluated separately. Your medical GoFundMe might not be taxable, but your product Kickstarter is.
What you should do
1. Determine if your campaign is a gift or business income based on the factors above
2. Keep detailed records of all money received and expenses paid
3. Set aside 25-30% for taxes if it's business income (federal + self-employment + state)
4. Make quarterly estimated payments if you owe more than $1,000 in taxes
5. Track it on Schedule C if it's business income from a side hustle
Key takeaway: GoFundMe for personal causes is usually a tax-free gift, but any crowdfunding for business purposes or with rewards is taxable income subject to self-employment tax.
*Sources: [IRS Revenue Ruling 2023-15](https://www.irs.gov/pub/irs-drop/rr-23-15.pdf), [IRS Publication 525](https://www.irs.gov/pub/irs-pdf/p525.pdf)*
Key Takeaway: GoFundMe for personal causes is usually tax-free, but business crowdfunding and reward-based campaigns like Kickstarter are taxable income subject to 15.3% self-employment tax.
Tax treatment comparison across major crowdfunding platforms and purposes
| Platform | Typical Purpose | Tax Treatment | 1099 Issued? | Self-Employment Tax? |
|---|---|---|---|---|
| GoFundMe (personal) | Medical, emergency, memorial | Not taxable (gift) | No | No |
| GoFundMe (business) | Startup funding, business help | Taxable business income | Yes (if >$600) | Yes (15.3%) |
| Kickstarter | Pre-selling products/services | Taxable business income | Yes (if >$600) | Yes (15.3%) |
| Indiegogo | Creative projects with rewards | Taxable business income | Yes (if >$600) | Yes (15.3%) |
More Perspectives
James Okafor, Self-Employment Tax Specialist
People new to freelancing who might use crowdfunding to launch their first business venture
For new business owners, crowdfunding creates immediate tax obligations
If you're launching your first business through crowdfunding, you need to understand that taxable crowdfunding income creates immediate tax responsibilities — even before you've delivered your product or service.
The business income recognition rule
Under IRS rules, you owe taxes on business crowdfunding income when you receive it, not when you fulfill rewards. So if your Kickstarter raises $25,000 in March, you owe taxes on that $25,000 for the current tax year — even if you don't ship products until December.
Example: First-time business owner taxes
Say you raise $25,000 on Kickstarter for your handmade jewelry business. After platform fees ($1,500) and fulfillment costs ($8,000), your taxable profit is $15,500.
As a new business owner, you'll owe:
Don't forget quarterly estimated payments
Since crowdfunding platforms don't withhold taxes, you're responsible for quarterly estimated payments if you'll owe more than $1,000. New business owners often miss this and face penalties.
For a $15,500 profit, you'd need to make quarterly payments of roughly $1,000-$1,500 to avoid penalties.
What new freelancers should do immediately
1. Open a separate business bank account for crowdfunding money
2. Set aside 30% immediately for taxes (higher percentage for safety as a beginner)
3. Start tracking expenses from day one — platform fees, materials, shipping, equipment
4. Register your business if required in your state
5. Get an EIN if you plan to hire help or want to separate business and personal taxes
Key takeaway: New business owners using crowdfunding must immediately set aside 25-30% for taxes and may need to make quarterly estimated payments to avoid penalties.
*Sources: [IRS Publication 334](https://www.irs.gov/pub/irs-pdf/p334.pdf)*
Key Takeaway: New business owners using crowdfunding must immediately set aside 25-30% for taxes and may need to make quarterly estimated payments to avoid penalties.
Sources
- IRS Revenue Ruling 2023-15 — Crowdfunding and Virtual Currency
- IRS Publication 525 — Taxable and Nontaxable Income
- IRS Publication 334 — Tax Guide for Small Business
Reviewed by James Okafor, Self-Employment Tax Specialist on February 28, 2026
This content is for educational purposes only and is not a substitute for professional tax advice. Consult a qualified tax professional for advice specific to your situation.