Can I deduct gofundme donations?
To answer the question can I deduct gofundme donations?, one must consider the facts and circumstances of the donation and apply the correct interpretation of the law.
If you are the donor:
The fact that a charitable contribution is made through gofundme does not make it nondeductible. Depending on the facts and circumstances of each gift, a donation through gofundme may be deductible. To be a permitted deduction on your federal income taxes, however, the donation must be made to a qualified organization. You may deduct a charitable contribution made to, or for the use of, any organization that is qualified under §170(c) of the Internal Revenue Code.
If you are donating to a gofundme personal campaign, the donation will be considered a personal gift and is generally not-deductible. This includes contributions made to an organization that does not qualify under §170(c). You cannot deduct contributions earmarked for relief or a particular individual or family. If you give more than $14,000, or $28,000 if you are filing jointly, to any one person, either directly or through a gofundme campaign, you are required to pay a gift tax on that monetary donation.
Gofundme has a program that certifies a list of qualified charities under §501(c) as non-profits. This program is known as the “Gofundme.org” certified charity campaign. Those qualifying for this campaign will have a (ü) badge followed by the words “Certified Charity”. Donations to these “GoFundme.org”campaigns are 100% income deductible.
If you receive or expect to receive a financial or economic benefit as a result of contributing to even a qualified organization, you cannot deduct the part of the contribution that represents the value of the benefit you receive.
If you are the recipient:
Crowdfunding services, such as gofundme, are required to report to the Internal Revenue Service campaigns that total at least $20,000 and 200 transactions. If your total money collected amount or number of transactions are higher than these amounts you may receive a 1099-K showing income to you. That income is probably not taxable, but the IRS may assume that it is so you must keep good records in case the IRS asks. Money collected from crowdfunding is considered either income or a gift. A gift is nontaxable to the recipient but may trigger a gift tax reporting requirement to the donor.
If you have set up a gofundme campaign that you receive money from without providing any service then the money collected is considered a gift and not taxable to you. It is not tax-deductible by the donor either.
In summary, the answer to the question can i deduct gofundme donations, requires an in depth analysis of the donation on the part of the donor and the recipient. If strategic tax planning is done prior to the donation, the answer is definitely yes! For further help on this topic Get a free consultation, or get pricing on our virtual tax prep services, now.