Are GoFundMe donations tax deductible?
Many taxpayers make donations to Go Fund Me drives for friends, family, and strangers, but are these donations tax deductible?
GoFundMe is a crowdfunding website that allows those who set one up to solicit donations online. The motivations for setting up a GoFundMe are diverse, with some hoping to receive donations to pay medical bills or debts. In contrast, others may hope to attract investment for a business idea or venture.
Those who start a GoFundMe and those who contribute should be aware of the tax law that governs crowdfunding.
According to GoFundMe, in the United States, “only donations made to [...] charity fundraisers are guaranteed to be tax-deductible.” To avoid any confusion, organizations will send donors a tax receipt that will be reported to the IRS if the contribution can be deducted. These will be e-mailed to the donor by PayPal Giving. This does mean, however, that donations made to GoFundMe drives that are not sponsored by a charity organization can not be written off.
Read more from AS USA:
The tax rules for those who start a GoFundMe
About a third of GoFundMe drives in the United States are created by people hoping to raise money to pay for medical treatments or pay off medical debt.
Those who seek to pay off their medical debts by creating a GoFundMe may be required to pay tax on the money generated. According to the IRS, funds raised that do not count as gifts are considered “gross income,” which “includes all income from whatever source derived unless it is specifically excluded from gross income by law.”
What is the difference between a gift and income?
However, the IRS advises that those who have received donations as “gifts” should consult with a tax professional to determine whether or not the funds count as income or not. Gifts which for the IRS are “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,” will not be taxed. But to ensure that one complies with the law, excellent record keeping of the fundraiser is necessary in the case that the IRS asks for justification as to why the funds do not count as income.