As the website explains, funds raised on Kickstarter are generally considered taxable. So Scott Eastman at the Tax Foundation calculated the tax bill Brown can expect to pay on his potato salad project. Eastman’s calculations work out to a tax bill of just over $21,000 based on $70,912 in donations (the total amount of pledges as of July 9, 2014, which has since decreased as noted above). That’s an effective tax rate of 32%.
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Income and Taxes Paid by Zach Danger
Brown
|
|
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The Potato Salad Maker From Kickstarter
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|
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Source: Tax Foundation Estimates
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|
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As of 2:28pm, Wednesday, July 9, 2014
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|
|
Income
|
|
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Total
Income
|
$70,912
|
|
Income
Minus Expenses and 5% Finders Fee
|
$65,912
|
|
Taxable
Income
|
$51,105.47
|
|
Taxes
|
|
|
Federal
Income
|
$8,632.22
|
|
State
Income
|
$1,712.00
|
|
City
Income
|
$1,510.20
|
|
Payroll
Tax Burden
|
$9,313.07
|
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Total
Tax Burden
|
$21,167.49
|
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Effective
Tax Rate
|
32.11%
|
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After
Tax Income Less Expenses
|
$44,744.51
|
Source: Tax Foundation, “$21,000 Tax Bill Just for Some Potato Salad,” July 9, 2014.
