How are kickstarter funds taxed?
March 15, 2010 10:57 AM Subscribe
So I, along with two other people are starting a magazine based out of Canada. We're planning to raise funding for it via Kickstarter.com but are worried that we're signing up for a nightmare of tax trouble.
The magazine itself is an LLC based out of Quebec.
Of the three of us there is:
A - A Canadian with no business ties to the US.
B - A Canadian with an American bank account but who is legally prohibited from having income in the USA.
C - An American
You need an American bank account to take receipt of the kickstarter funds. I presume that the bank transfer from kickstarter to either B or C's US bank accounts would count as income.
So, say, C took possession of the kickstarter money (~$10,000) and then transferred all of it to magazine's bank account in Quebec. Would all ten grand be considered taxable income for C?
If so, is there any way to alleviate that?
I know that the corporation could file an intent to do business in the USA and then open a US bank account of its own but, frankly, the costs involved in doing that seem to be so great as to render the entire endeavour infeasible.
I know that we need a tax lawyer and, eventually, we will get one. But right now our assets our $0 and I'm trying to figure what sort of trouble we're signing ourselves up for.
As an aside: Does anyone know if it's possible to start a kickstarter project using one Amazon payments account and change it before actually taking delivery of the funds?
The magazine itself is an LLC based out of Quebec.
Of the three of us there is:
A - A Canadian with no business ties to the US.
B - A Canadian with an American bank account but who is legally prohibited from having income in the USA.
C - An American
You need an American bank account to take receipt of the kickstarter funds. I presume that the bank transfer from kickstarter to either B or C's US bank accounts would count as income.
So, say, C took possession of the kickstarter money (~$10,000) and then transferred all of it to magazine's bank account in Quebec. Would all ten grand be considered taxable income for C?
If so, is there any way to alleviate that?
I know that the corporation could file an intent to do business in the USA and then open a US bank account of its own but, frankly, the costs involved in doing that seem to be so great as to render the entire endeavour infeasible.
I know that we need a tax lawyer and, eventually, we will get one. But right now our assets our $0 and I'm trying to figure what sort of trouble we're signing ourselves up for.
As an aside: Does anyone know if it's possible to start a kickstarter project using one Amazon payments account and change it before actually taking delivery of the funds?
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