Welcome to Just Crowdfund the $&*# Movie!, where indie moviemaker Jayce Bartok talks about the dos and don’ts of crowdfunding from the trenches of his own crowdfunding campaign. Have a question for Jayce about his movie, Tiny Dancer, or just crowdfunding in general? Ask away at .
A few days ago, friend and fellow producer Christopher Shea e-mailed me with a question about his girlfriend’s successful crowdfunding campaign, for her film The Quiet Girl’s Guide to Violence (which sounds awesome, right?). Chris wrote: “I guess what I’m curious about is now that we’ve raised this money, and after we kick back to Kickstarter and Amazon the percentages due to them, how much should we expect to pay back to the federal government?”
A cold trickle ran down my neck. Government? Taxes? What?!? This sounds horrible. Paying taxes on hard-earned money coaxed from our crowds?! What’s next, taxing us for drinking coffee? Hmmmm. I think they already do that. Anyway, Chris was so flattering in his e-mail about how I am a crowdfunding scholar at this point, and all I could do was fumble for a lame-ass response like “You realllly should ask your accountant.” Isn’t that always the “right” answer to friends with financial questions?
But Chris’ tax question is actually one of the most important issues associated with crowdfunding. I’ve researched a little, even written my own accountant, Jeffrey, and I’m still not entirely clear on what we filmmakers should expect come tax time, except to say that we will be taxed (some say at 13.3%). A 1099 or some such form will arrive at the end of the year from Kickstarter or Indiegogo stating you received X amount of income from your campaign. To which you say: “Hey, man, I didn’t use it to pay rent or anything! I made my movie!” Money from our campaigns is considered income unless one is working through a fiscal sponsor (as Tiffany and I did) and the funds are considered tax-deductible donations. In that case, your fiscal sponsor issues 1099s to all your vendors as you submit receipts, keeping it all legit… unless you withdraw all your funds to pay yourself back, as we did recently. Then what happens?! I’ll let you know, but as of yet I haven’t quite wrapped my mind around all the moving money we are in the midst of for Tiny Dancer. Non-proft to LLC to personal to other LLC. If I go to jail, will you all still write me?
Seriously, no need to worry about that, as we are taking the advice of our accountant. I guess the one bit of knowledge I can add to this tax question—and I’d love the tax experts out there to chime in on this particular entry—is that one should set up an LLC for their film, even if it’s really low-budget (aren’t they all!). You probably all know this already, but an LLC protects you and your team from lawsuits and is the proper way to create a company for your film, to legally record profit and loss, pay taxes and be all grown up and right about things. Now, just thinking through this… stop me if I’m wrong, but the funds we all raise through our campaigns come to either us or our LLCs (as investments from us, the filmmakers, in our own movie). In theory, we will have various funds coming into our movie LLC accounts from crowdfunding, investments, really nice relatives, etc…. At the end of production, and for a long time after, we will each file a tax return for our LLC, which will include said money from our crowdfunding campaign. On this tax return, we will have all of our film’s expenses, crew and cast paid, 1099s and various other scary and flimsy forms. This tax return (which will cost at least $500 to prepare) will show that we’ve made no money on our films as of yet, ‘cause we spent it all on the crazy business venture itself. And our personal tax return—which will show that we received money from our warm, fuzzy, 1099-issuing crowdfunding platform—will also reveal that we invested said funds in the LLC. In this way, hopefully, we will, while not avoid paying taxes, really show the government that we are doing with the money what we intended—creating a new business (or film, in this case) for the betterment of humanity.
You might very well be asking: “What if I don’t have an LLC for my film?” Well, you probably put all this mess on your personal tax return and are letting the chips fall where they may—deductions for your film vs. crowdfunded income. However, the threshold for taking deductions off a personal return is much lower than on a business (LLC) return, FYI.
And, as someone who should not be giving any kind of tax advice, let me reiterate: Please check with your accountant!
And this week’s Just Crowdfund the $&*# Movie! shout-out goes to the dark comedy/thriller Love Letter, being crowdfunded by N.C. filmmaker Craig Thieman. They’ve already raised almost $19,000 (!?) and have 10 days to go to reach their $40,000 goal. Good luck, Craig.
Jayce Bartok is an actor/producer/writer/director who runs Vinyl Foote Productions from Brooklyn with his wife Tiffany. He wrote, co-produced and starred in The Cake Eaters and can currently be seen in USA’s “White Collar” and in the upcoming feature films Predisposed, opposite Melissa Leo, and Price Check, both of which premiered at the 2012 Sundance Film Festival. To stay updated on his Tiny Dancer progress, follow @JayceBartok and @TICNYC on Twitter.