This same aunt, also became a caregiver to 2 small boys who she’s been raising since to this day, they are now 7 & 6 y/o. This aunt who was widowed in 2015, also had her home of 40 years foreclosed on a week before Christmas of that same year. Her mom (my aunt) who is about 75 y/o lives in section 8 housing. My cousin who was in her early 50’s passed away unexpectedly back in August 2020. I have a situation and I need some advice. For this reason, it’s a good idea to be very clear with donors how their funds will be used.”įor the very rare situation when someone doesn’t use the funds as intended, there is a GoFundMe Guarantee. According to GoFundMe, “Donations need to be used for the cause listed on the fundraiser. Donor’s may have gift tax filing requirements depending upon the amount of the gift.Īlthough not an income tax issue, the GoFundMe criteria for fund payment should to be reviewed to confirm whether or not the pay-out is a valid expense in accordance with the intended use of the funds.
For income tax purposes it does not matter what gifted funds are expended for and there is no limit to the recipient for income tax purposes. Whether you are establishing a campaign or contributing to one, you may want to consult with your tax advisor.Īs long as the contributions to the Go Fund Me account are for individuals and the contributors do not receive anything in exchange for their contribution, what they give is a gift, nontaxable to the recipient and nondeductible by the donor. If you are thinking of establishing a crowdfunding campaign, you should research your options on-line. However, if the donor exceeds the “annual gift tax exclusion” ($15,000 per donee per year), they may be required to file a federal gift tax return to report their gift. If no goods or services were received in exchange, these contributions would be treated as gifts and would not be taxable to the recipient. Other ConsiderationsĬontributions made to crowdfunding sites are earmarked for a particular individual or organization and therefore are NOT tax-deductible ( for donations to be tax-deductible, they must be made to a qualified charitable organization (“501(c)(3)” organization) and for the benefit of the general public, not for the benefit of a specific (named) individual or organization). For example, if an organizer wants to raise funds for the college expenses of a child who lost a parent, the contributions to the campaign would NOT be taxable. Gifts (as mentioned above) are not considered income. and no one received any goods and/or services in exchange for their contribution, the income would be considered a gift. If the organizer’s intent was to raise funds to cover the costs of life events, medical expenses, etc. Mean that the contributions are taxable to you. However, if you receive a 1099-K, it does not necessarily To complete IRS Form 1099-K if total contributions exceed $20,000 and more than 200 transactions were madeĭuring the calendar year. Responsibility of the crowdfunding site, or its third party processor (such as PayPal) Is considered a non-taxable contribution to the capital or equity of the business. Receive an ownership interest in the business in exchange for your funds, this Your contribution, the funds will be taxable to the organizer.
Musician’s new CD and he/she says you will receive a “free” copy of the CD for ForĮxample, if an organizer wants to raise funds to kick-start the production of a
The raised funds are considered taxable business income by the IRS. Organizer’s intent was to raise funds in exchange for goods and/or services,
Did the supporters receive goods and/or services in.What was the campaign organizer’s intent?.Two key factors are important with regard to determining if there is a tax liability: If you are the recipient of a crowdfunding campaign, be sure to keep good records of contributions received and consult your tax advisor. However, you could still owe taxes, depending on how the funds were used and if anything was provided in exchange. The IRS does not consider fundraising proceeds a taxable source of income. Generally, contributions made to “crowdfunding” campaigns (such as GoFundMe) are considered to be personal gifts, and as such, are not taxed as income to the recipient. (Updated on Septem– originally published on February 20, 2020)
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