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By Staff Reporters
SPONSOR: http://www.CertifiedMedicalPlanner.org
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Crowdfunding is a popular way to raise money online. People often use crowdfunding to fund raise for a business, for charity, or for gifts. It’s important to know that money raised through crowdfunding may be taxable.
Do you have to pay taxes on the money you receive from GoFundMe, etc?
Generally, you will not owe taxes on donated funds you receive from a crowdfunding platform. The IRS considers the money received from GoFundMe to be a gift instead of income, so it is typically not taxable. A gift is any transfer of cash or property you make to an individual without receiving full consideration in return, according to the IRS. People who donate money to GoFundMe to help pay for medical expenses are typically doing it out of generosity and do not expect anything in return.
Some money raised through crowdfunding may NOT be considered a gift.
Under federal tax law, gross income includes all income from any source, unless it’s excluded from gross income by law. In most cases, gifts aren’t included in the gross income of the person receiving the gift. Here’s what people involved in crowdfunding should know:
- If a crowdfunding organizer is raising money on behalf of others, the money may not be included in the organizer’s gross income, as long as the organizer gives the money to the person for whom they organized the crowdfunding campaign.
- If people donate to a crowdfunding campaign out of generosity and without expecting anything in return, the donations are gifts. Therefore, they will not be included in the gross income of the person for whom the campaign was organized.
- However, not all contributions to crowdfunding campaigns are gifts and may be taxable.
- When employers give to crowdfunding campaigns for an employee, those contributions are generally included in the employee’s gross income.
Taxpayers may want to consult a trusted tax pro for information and advice regarding how to treat amounts received from crowdfunding campaigns.
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Filed under: "Ask-an-Advisor", Accounting, CMP Program, Funding Basics, Taxation | Tagged: certified medical planner, CMP, CPA, crowd funding, go fund me, IRS | Leave a comment »
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