Reference: IRS Code Secs 61(a) and 102(a)

At this point, there isn’t a lot of specific regulation written on the topic of crowdfunding. IRS guidance is based on intent and use of the funds as well as common reporting from the funding sites.

Business: Funds raised for business purposes, such as to provide “seed capital” for emerging businesses are often reported by the funding sites on the IRS Form 1099-K as receipt of funds by party for business purposes (regardless of whether personal property changed hands or not). In such situations, the amounts raised should be reported as taxable business income under IRC Sec 61(a).

Individual/medical/personal funding: Sites are often set up to raise money for individual life-events such as medical needs, burial needs, or other specialized individual (non-business) events. Typically such are treated as gifts from one party to another and aren’t taxable to the recipient under IRC Sec 102(a). Note that if a gift is over $15,000 (2019 limit) from a single individual , then the grantor (not the recipient) will be required to file a gift tax return.