Taxes on VeriLabz

A guide for your accountant.

What is VeriLabz?

VeriLabz is a funding platform for scientific missions. Everything from mass spectrometry to replication studies and hardware validation. VeriLabz is full of ambitious, innovative, and experimental missions that are brought to life through the direct support of funders.

This guide is informational only and is not legal, accounting, or tax advice.

How does VeriLabz work?

Every mission creator sets their mission's funding goal and and potential deadline. If people like the mission, they can pledge money to make it happen. If the mission or challenge succeeds in reaching its funding goal, all funders' credit cards are charged when time expires or when the first milestone is reached and held in escrow. Funding on VeriLabz is refundable before the first milestone is reached. If the project falls short of its deliverables, the funding may be refunded into the users wallet in-app. If a project is successfully funded and a milestone is paid out, VeriLabz applies a 4% fee to the funds collected.

Why do people support missions on VeriLabz, and what do they get in return?
Funders pledge money for different reasons. Some funderss are rallying around their friends' missions and reasearch. Some are supporting people they've long admired. Many are just inspired by a new experiment or want to find out something new. Others are inspired by a mission's rewards — moving humanity forward scientifically, open-source research and public findings, or just researching one of their hobbies. Mission executors keep 100% ownership of their work, but can choose to allow the information to be used by others if they allow. VeriLabz cannot be used to offer financial returns or equity, or to solicit loans. Some missions that are funded on VeriLabz may go on to make money, but funders are supporting missions to help them come to life, not financially profit.

You can learn more about VeriLabz and how it works on our help page or our terms of service page.

How do taxes work on VeriLabz?

VeriLabz currently operates with a marketplace-facilitator style model. Where required by law, we may calculate, collect, and remit indirect taxes on qualifying transactions (for example sales/use tax in applicable U.S. states and VAT/similar taxes where required).

We can’t give tax advice, but we have compiled this guide for US-based financial professionals who may not be familiar with VeriLabz. This information is not intended to be used, and cannot be used, by any taxpayer for the purpose of (1) avoiding tax-related penalties under the US Internal Revenue Code or (2) promoting, marketing, or recommending to another party any tax-related matters. This information is just a start. In general, in the US, funds raised on VeriLabz are considered income. In general, a creator can offset the income from their VeriLabz project with deductible expenses that are related to the project and accounted for in the same tax year. For example, if a creator receives $1,000 in funding and spends $1,000 on their project in the same tax year, then their expenses could fully offset their VeriLabz funding for federal income tax purposes. If a creator receives funding in one year and spends money on their project in a later year, consider whether their expenses can still offset their VeriLabz funding using the accrual method of accounting. Executors who have passed over the thresholds established by the IRS (currently $20,000 in gross volume per year and 200 or more transactions) will receive a form 1099-K from our payment processor, Stripe, in January following the year in which their project was successfully funded. Beyond deductions, a creator may be able to classify certain funds raised on VeriLabz as a nontaxable gift, and not income. A gift is something given out of “detached and disinterested generosity” for personal reasons and without the expectation of getting something in return. Sales tax may also be applicable in certain cases depending on the local rules. A creator may have an obligation to register, collect, and remit sales taxes in the states in which the funders are located, depending on the dollar amount received and the number of transactions entered into with funders in each state. The creator may also have an obligation to register, collect, and remit sales taxes in any states where the creator lives or spends substantial time.

For mission executors outside the US, please refer to your local tax authorities:

Tax handling can differ by transaction type, user location, and jurisdiction rules.
We may update these controls as legal requirements and product flows evolve.

What executors and users are responsible for

  • Reporting income from mission activity.
  • Tracking deductible business expenses and records.
  • Maintaining accurate legal entity and tax information in Stripe Express.
  • Working with a qualified tax advisor for your specific filings.

Tax forms and payout processor

Tax forms (including U.S. 1099 forms, where required) are delivered via Stripe Express. Form delivery and filing status depend on your verified payout account configuration.

What is the 1099-K Form?

Every year, the United States IRS requires that Stripe (our Payments Processor) provide a form called a 1099-K for each Stripe account that meets all of the following criteria in the previous calendar year: Mission creator bank account is based in the United States AND More than $20,000 USD in total gross volume AND More than 200 charges The 1099-K is a purely informational form that summarizes the sales activity of your account and is designed to assist you in reporting your taxes. It is provided to you and the IRS, as well as some US states.
For more help understanding your 1099-K, go to IRS.gov or Understanding your 1099-K from the IRS.
You can also download a blank example of the 1099-K form here.

States with lower threshold requirements Massachusetts, Mississippi, and Vermont require 1099-Ks to be filed for each unique tax identification number with at least $600 USD in gross volume. Missouri requires 1099-Ks to be filed for each unique tax identification number with at least $1,200 USD in gross volume. If you processed $20K and 200 transactions or less and still received a 1099-K Form Stripe provides a 1099-K form for each unique tax identification number (TIN), such as a Social Security Number (SSN) or Employer Identification Number (EIN), that meets the IRS processing threshold.

If you received a 1099-K and didn't expect to, it might be because:
- You have two or more accounts with the same TIN; one meets the IRS threshold and one does not. Each will receive a 1099-K.
- You have two or more accounts with the same TIN; neither are over the IRS threshold individually but, when combined, the threshold is met. Each will receive a 1099-K.
- You are a business or individual based in Massachusetts, Mississippi, Missouri, or Vermont.

Related guides or links

This guide is informational only and is not legal, accounting, or tax advice.