Accepted Answer

Hello workerbee,

You are correct that since you are not set up as a non-profit organization, donations made to your fundraiser would not be deductible by the persons making the donations. However, this does not mean that the donations would be taxable income to you or to the person from Ireland.

These donations would simply be treated as gifts. And while the gifts are not deductible by the donors, they are also not taxable income to the recipient. Under current regulations, every taxpayer is allowed to give up to $1 million in lifetime gifts before any gift tax becomes due. Each taxpayer is also allowed an annual exclusion on gifts of $13,000 per individual, and gifts which fall below that amount do not need to be reported and do not count towards the $1 million lifetime exclusion amount. If any one individual were to donate more than $13,000, then that person would report the value of the gift by filing form 709, but no tax would be due unless the $1 million lifetime limit had already been used.

This is no different than neighborhood fundraisers that are held to help someone in the community who needs help, or a fundraiser that may be held by students to help fund a school trip. The money donated would be considered a gift and would not be taxable income to the recipient.

If this was helpful please press the Accept button. Positive feedback is also appreciated.

Thank you workerbee.

Expert:	Merlo
Pos. Feedback:	99.8 %
Accepts:
Answered:	9/17/2009

Accountant

25+ years tax consulting. Specializing in returns for US citizens living abroad