Tax implications of an overseas business running a Kickstarter campaign via a US or UK person's account

If an overseas business runs a Kickstarter campaign via a US or UK person's account, does anyone know what the tax implications would be for a US resident? Does anyone know what the tax implications would be for a UK resident?

Is it as simple as they did not earn the money because it was channelled through to the overseas business (in this case, an Australian business)?

(I ask because Kickstarter currently allows only US and UK Amazon Payments accounts.)

Thank you in advance for your response. :)

Tax Offshore Kickstarter

asked Jan 23 '13 at 21:17

Mark Sheppard
16 points

_(I ask because Kickstarter currently allows only US and UK Amazon Payments accounts.)_ --> Then why use Kickstarter? Try another service, like [IndieGoGo](http://www.indiegogo.com/) – Elssar 12 years ago
Thanks for your comment, elssar. :) We actually did run an Indiegogo campaign; however, it saw far less traffic than was needed, which seems to be a difficulty many crowd funding projects have on Indiegogo vs Kickstarter, especially for computer games. – Mark Sheppard 12 years ago
Well, The Oatmeal didn't have any problems raising money for his campaigns on IndieGoGo. Granted that he is pretty famous, and his campaigns both got lots of publicity because of the events that led to the campaigns, and that Indiegogo isn't as popular as Kickstarter, if you market your campaign properly, and it has promise, no reason why you shouldn't be successful. And a Kickstarter is no silver bullet - there are no guarantees that a kickstarter campaign would be more successful, just because it's on kickstarter – Elssar 12 years ago
I have to agree with @elssar. Using Kickstarter is not a guarantee of traffic. If you don't promote your campaign like crazy, you are bound to have the same results as you did on IndieGoGo. – Zuly Gonzalez 12 years ago

1 Answer

If an overseas business runs a Kickstarter campaign via a US or UK
person's account, does anyone know what the tax implications would be
for a US resident?

Pretty simple. The US resident (account owner) will be liable for income taxes on the income raised.

Is it as simple as they did not earn the money because it was
channelled through to the overseas business (in this case, an
Australian business)?

Well, that's not what they said when they started the campaign, so no-one cares. The US resident will be liable for taxes.

answered Jan 24 '13 at 05:10

Littleadv
5,090 points

I think the question is wether or not the deductions you could make by paying an Australian company to do the work would wholly offset the increased tax. If you make 10k from kick starter and spend 10k making the product, the additional taxable income is 0. – Jay Kyburz 11 years ago
1

@Jay of course, if you could actually expense. In the US you have to pay tax on any income, but only deduct expenses that you incurred to *make profit*. So if your project is not for profit you will not be able to make the deduction (unless you qualify for 501c of course, which is a bureaucratic process). The Australians are irrelevant, as kickstarter doesn't allow australians in. The USan who is raising the money will have to be able to deduct, and to show that it is a legitimate business expense. – Littleadv 11 years ago