The money you earned from GoFundMe or crowdfunded money is considered a nontaxable gift.
Crowdfunded Money Is Considered As Nontaxable Gifts? – Read To Know More! (PHOTO: Journal Of Accountancy)
Is Crowdfunded Money Are Taxed?
According to the IRS donations can be considered nontaxable gifts for tax purposes. If you increased money through a crowdfunding platform for personal reasons, such as to get assistance with a medical bill, or to source money for an educational goal, those money are likely considered a gift and thus not taxable as long as the people who donated did not receive anything as an incentive for donating.
Money are increased in a crowdfunding campaign is considered taxable when:
-
Donors obtain something of value in return for their contribution. The IRS could consider the donation to be a sale, which would indicate any profits could be taxed as personal payment.
-
An employer donates to a crowdfunding campaign set up to aid someone who works for them. These contributions are not considered gifts and must be added to the recipient’s gross income.
The same regulations are in effect for funds you set up on behalf of another individual, as long as the money was provided to them as promised. If you’re expanding funds for a business venture, things can fast get more complex, so it might be a good idea to work with a tax expert if you have any suspicions regarding the taxability of your fundraiser.
Do You Still Need To Pay For Gift Taxes On The Money You Donate?
If you donated over $16,000 in 2022 or $17,000 in 2023 to a crowdfunded money campaign not run by a qualifying charity, be aware that you may be on the hook for filing a federal gift tax return. This doesn’t indicate you owe the federal gift tax few people actually end up paying gift taxes but you may need to report your charity to the IRS during tax seasson.
READ ALSO:
Gov. Kathy Hochul Childcare Funding In New York Says The Budget Is A Key Issue
Gov. Kathy Hochul Childcare Funding In New York Says The Budget Is A Key Issue
