How to report Kickstarter pass-through payment

Last year I started a Kickstarter campaign to fund continued support of my my Thunderbird add-ons for Thunderbird 78 and beyond. The funds from the Kickstarter were intended to go to a non-profit corporation I was starting that would serve as the recipient and custodian of the funds from the campaign. When I set up the campain I hadn't yet set up the bank account for the corporation, so I specified my personal bank account to receive the funds.

In the middle of the campaign I set up the bank account for the non-profit, but it was difficult to change the bank account that Kickstarter had already been given, so I left it the same. At the end of the campaign, Kickstarter paid the funds into my personal bank account, and a few days later I transferred the full amount of that payment into the bank account of the non-profit.

Given that I received a 1099-K from Stripe for the gross revenue from the Kickstarter campaign, and I believe Stripe has sent a copy of that 1099-K to the IRS, I imagine the IRS is going to come after me if the money doesn't show up on my tax return somehow. However, I don't think it should count as income on my return since I was only serving as a conduit to get the money from Kickstarter to the non-profit. How do I report this on my taxes?

Other complicating factors:

1) I'm still waiting for the IRS to approve the 1023-EZ for the non-profit, i.e., it's registered as a *state* non-profit but has not yet been approved as a *federal* 501(c)3. Having said that, I don't think that changes the answer to this question, since all that means is that if the approval doesn't come through then the non-profit, not me, should owe taxes on the money from the campaign.

2) The 1099-K from Stripe shows the gross revenue from the campaign, i.e., the credit card processing fees and Kickstarter fees have not been subtracted from it. It's a significant difference: the amount I received is 89% of the amount reported on the 1099-K. I assume this also has to be reflected in how I report this on my tax return.

Given that my Thunderbird add-ons have always been treated as a hobby on my taxes and I did not intend to make a profit from this Kickstarter -- like I said, the intention was to send the proceeds to a non-profit corporatieon, from which I don't get any money at all -- I think I could report the Kickstarter proceeds as hobby income and the fees and commissions as a hobby expense, but that leaves the net Kickstarter proceeds as hobby income, which is wrong. Can I just report them as a hobby expense, since they were an "expense" in the sense that I paid them out to the non-profit shortly ater receiving them?

I suppose if the IRS approves the 501(c)3 application before I file my taxes I can just report that amount as a charitable donation to the non-profit (and write myself a letter from the non-profit -- of which I am president -- for my records, confirming that no goods or services were provided in exchange for the donation, or maybe get the treasurer of the org to write the letter to avoid the appearance of impropriety), since I'm itemizing this year and the total of all my charitable donations doesn't hit the 60% of AGI limit. That would presumably make my taxes come out OK, but it would increase my AGI by the amount of the net Kickstarter proceeds, which I'd rather avoid because I'll then have to explain that to the four different schools to which I'm currently applying for financial aid every year for my kids.

TIA for any advice you can offer.

jik

Reply to
Jonathan Kamens
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First of all, you don't always have to have IRS approval before you treat your organization as a nonprofit. If you took in less than $15,000 you're likely safe even if you didn't file the 1023-EZ. But having filed it, once approved, nonprofit status will be retroactive to the date of incorporation if it was filed within 27 months of the date of incorporation. Just file the Form 990 as if nonprofit status had been approved.

You can file your own 1099, sometimes referred to as a nominee 1099, showing that they reported the money as coming to you when it should have gone to your nonprofit.

Again, I think you can report it all on the nonprofit's 990 rather than your personal tax return.

Reply to
Stuart O. Bronstein

If you expect to have less then $5000 revenue per year, the IRS says you don't even even need to apply:

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I agree with the rest of the advice, you're a nominee, send the non-profit a 1099 to cancel out the one you got from kickstarter, and don't forget to file your annual 990-N.

Reply to
John Levine

Thanks for the help.

I think it's likely that the nonprofit will have less than $5,000 in revenue per year, but in the *first* year it has over $45,000 in revenue because that's how much I got from the Kickstarter, so I don't know whether I need to apply for and receive 501(c)3 status or not. I figured better safe than sorry, especially since the 1023-EZ is, well, easy.

What I'm still unsure about is where, exactly, on my taxes I will report the 1099 I got from Stripe and the

1099 I issue to the nonprofit. I don't have a Schedule C because I'm not self-employed. Am I going to need to add a Schedule C solely for the purpose of reporting the two 1099's?
Reply to
Jonathan Kamens

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