Are honeymoon and wedding crowdfunding income or gifts? How are they taxed?
The IRS has not released specific guidance regarding crowd-funding, but based on regulations regarding income in general, the tax implications can be determined by examining the intentions of the donor and recipient.
Source: IRS Publication 525, IRS Form 709 Instructions
The tax implications depend on what the crowdfunding is used for and whether the donor is receiving anything in return for the contribution.
In the situation of a wedding or honeymoon contribution, the income will usually be considered a gift. In this case, there will be no tax owed by the recipient, and usually no tax owed by the donor.
If one gift exceeds $14,000, the donor must file a gift tax return.
**Important Note: In cases where the donor is assessed a gift tax and does not pay this tax, the recipient of the gift may have to pay the tax.
There will likely be no definite regulation on crowdfunding until a case is brought before the tax court. It is important to maintain records and documents regarding the funding and the use of the funds because of the ambiguity of the issue.