GoFundMe donations

[Catherine]

These folks (Corvee) keep sending me solicitations to buy their planning software (which may be very good, but I'm not interested). But they also send me links to blog posts. This one, on GoFundMe fundraisers, may be useful as a client handout (email-out).

Corvee GoFundMe article

 

For those who won't click links, here is the text (missing all the nice formatting):

Over the past decade, GoFundMe has turned into the biggest crowdfunding platform there is. Many of the fundraisers on GoFundMe are charitable in nature, so it’s natural that people would wonder: are my GoFundMe donations tax deductible?

Like many questions involving taxes: it depends. If you are donating to a qualified 501(c) organization that has set up a GoFundMe page, then yes. There is a list of certified charities so donors can know if they are making a tax-deductible contribution. If it’s not a qualified 501(c), then it’s considered a personal donation and therefore is not tax deductible.

Deductible Vs. Non-Deductible Donations on GoFundMe 

GoFundMe actually started out as CreateAFund in 2008. It later morphed into GoFundMe in 2010. As a platform to raise funds for almost any cause, GoFundMe donations are considered personal in nature, unless they’re made to a 501(c) organization that has registered on the site.

All donations made to personal GoFundMe pages, as opposed to specific 501(c) charity fundraisers, are considered personal gifts — which are not guaranteed to be tax deductible. It can be confusing because you may be doing a charitable thing on GoFundMe, but just because a gift is charitable doesn’t make it automatically eligible for tax relief.

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Look out for other unintended tax consequences from direct contributions to individuals. Because these gifts are not considered charitable, giving large amounts over the annual exclusion gift amount may trigger a requirement to file a form 709 and report the gift amounts. The recipient themselves will not be taxed on the money received. 

How it Works: GoFundMe raises money for individuals, groups of individuals or organizations. Among these, there are two types of fundraisers: a standard campaign or a Certified Charity campaign. With the standard campaigns, many GoFundMe organizers are individuals who have raised money for a cause and can deposit the money raised into their own personal bank account. 

While many of the personal causes are good, worthy causes, such as money raised for tuition, medical expenses, funerals, etc.,these gifts are being made to people as opposed to registered charities and as such they generally are not tax deductible. 

A Charity Campaign, meanwhile, collects donations that go directly to a 501(c)(3) organization. In these cases, the GoFundMe organizer doesn’t handle the money; instead, the funds are sent directly to the charity via the PayPal Giving Fund. This special fund was set up by GoFundMe to facilitate gifts to registered charities. 

Donors receive receipts from the PayPal Giving Fund, which allows them to claim possible tax deductions. 

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How Giving on GoFundMe Works

Donations to nonprofits are usually tax deductible. The IRS allows you to deduct up to 50% of your adjusted gross income (AGI) if the donation is made in cash, although 20% and 30% limits sometimes apply. For 2020 and 2021, the 50% limitation is suspended, allowing individuals to donate up to 100% of their AGI. Thus, giving to specific 501(c)(3) organizations on GoFundMe could prove to be a good way to reduce tax burden. Just be sure to get your receipt from the PayPal Giving Fund. Remember that personal donations (meaning direct contributions to individuals) through GoFundMe are likely not tax deductible.

To claim any possible deduction, itemize deductions on your tax return using Schedule A (Form 1040). Typically, charitable donations could be eligible for deductions if they are given to:

A religious organization

Federal, state and local governments

Certain war veterans’ groups

Nonprofit schools and hospitals

Charitable contributions typically not deductible include donations to:

Foreign organizations

Political parties, action committees (PACs) or fundraisers

Individuals

Foreign governments

For-profit schools or hospitals

Social and sports clubs

Labor unions

Homeowners’ associations

Note that a large percentage of donations on the GoFundMe platform are to individuals, making them non-deductible.

What About GoFundMe.org?

There can also be donations made directly to GoFundMe.org, which is a separate entity from GoFundMe. GoFundMe.org is a 501(c)3 public charity that is independent of GoFundMe with a separate board of directors and leadership. 

While it works closely with GoFundMe, GoFundMe.org cannot receive payments from any GoFundMe campaign except for fundraisers for which GoFundMe.org is identified as the beneficiary. So, you can make a tax-deductible donation to GoFundMe.org that is promoted on the GoFundMe platform. 

The federal tax ID number of GoFundMe.org is 81-2279757. GoFundMe, however, is not a qualified 501(c)(3) charitable organization, so be sure you check before you give!

[schirallicpa]

Wonder when IRS is going to start taxing money received from GFM as taxable income.  There are some out there that are living off GFM.

 

[Lee B]

"Receipt of a Form 1099-K for Distributions of Money Raised Through Crowdfunding

The crowdfunding website or its payment processor may be required to report distributions of money raised if the amount distributed meets certain reporting thresholds by filing Form 1099-K, Payment Card and Third Party Network Transactions, with the IRS. If Form 1099-K is required to be filed with the IRS, the crowdfunding website or its payment processor must also furnish a copy of that form to the person to whom the distributions are made. The American Rescue Plan Act clarifies that the crowdfunding website or its payment processor is not required to file Form 1099-K with the IRS or furnish it to the person to whom the distributions are made if the contributors to the crowdfunding campaign do not receive goods or services for their contributions."

 

"Tax Treatment of Money Raised Through Crowdfunding

Under federal tax law, gross income includes all income from whatever source derived unless it is specifically excluded from gross income by law. In most cases, property received as a gift is not includible in the gross income of the person receiving the gift.

If a crowdfunding organizer solicits contributions on behalf of others, distributions of the money raised to the organizer may not be includible in the organizer's gross income if the organizer further distributes the money raised to those for whom the crowdfunding campaign was organized.

If crowdfunding contributions are made as a result of the contributors' detached and disinterested generosity, and without the contributors receiving or expecting to receive anything in return, the amounts may be gifts and therefore may not be includible in the gross income of those for whom the campaign was organized. Contributions to crowdfunding campaigns are not necessarily a result of detached and disinterested generosity, and therefore may not be gifts. Additionally, contributions to crowdfunding campaigns by an employer to, or for the benefit of, an employee are generally includible in the employee's gross income."