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Question

i want to set up a donation account for two co workers who's spouse have cancer and have mounting medical expenses. my bank says i need to apply for an ein number. any advise??

Submitted: 28 days and 10 hours ago.
Category: Tax
Value: $15
Status: CLOSED
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State/Country relating to question: Arizona

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Posted by LEV 28 days and 10 hours ago.

Answer

If you want to help a person to open a bank account - that person generally should use social security number.

Donations are considered gifts and are not taxable for that person.

A gift is not taxable income in the US regardless of the amount.

Please see IRS publication 525 page 33 for reference - http://www.irs.gov/pub/irs-pdf/p525.pdf

 

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Let me know if you need any help.

 

28 days and 10 hours ago.

Reply

To be more clear. I want to set up an account with my bank where I can raise funds to help my co workers. The funds donated need to be tax deductible to the people donating and tax free to those who I'm trying to help. My bank says I need to get an EIN number from IRS and letter from the two co workers along with their SS#s. All I'm trying to do is set up an account where people can donate generously who can claim their donation for charitable tax donation and of course the benefiting families don't have to pay taxes on the gifts.

Posted by LEV 28 days and 9 hours ago.

Answer

Unfortunately such donations may not be tax deductible.

According to IRS rules - see publication 526 - http://www.irs.ustreas.gov/pub/irs-pdf/p526.pdf

There are some contributions you cannot deduct.

You cannot deduct contributions to specific individuals, including the following.

  • Contributions to fraternal societies made for the purpose of paying medical or burial expenses of deceased members.

  • Contributions to individuals who are needy or worthy. This includes contributions to a qualified organization if you indicate that your contribution is for a specific person. But you can deduct a contribution that you give to a qualified organization that in turn helps needy or worthy individuals if you do not indicate that your contribution is for a specific person.

    Example. You can deduct contributions for flood relief, hurricane relief, or other disaster relief to a qualified organization. However, you cannot deduct contributions earmarked for relief of a particular individual or family.

  • Payments to a member of the clergy that can be spent as he or she wishes, such as for personal expenses.

  • Expenses you paid for another person who provided services to a qualified organization.

    Example. Your son does missionary work. You pay his expenses. You cannot claim a deduction for your son's unreimbursed expenses related to his contribution of services.

  • Payments to a hospital that are for a specific patient's care or for services for a specific patient. You cannot deduct these payments even if the hospital is operated by a city, state, or other qualified organization.

If you inform donors that their contributions are tax deductible - that would be incorrect.

Only contributions to qualified charitable organizationa are deductible.

Let me know if you need any help.

28 days and 9 hours ago.

Reply

I'm sorry but I don't understand. My bank says these type of medical expense emergency funds can be set up but you are saying they can't as far as tax deductile piece goes. They indicated I would need to get an EIN or TIN from the IRS.

Accepted Answer

Most likely - the person you talk in the bank misunderstood you.

Such deductions are not tax deductible.

I provided you above the reference to the IRS publication - so you may print it and talk to that person.

You may also call IRS directly 1-800-829-1040 - and confirm the information I provided.

 

I am sorry if you expected such contribution to be tax deductible - but the truth is - they are not.

 

Employer ID Numbers (EINs) - here is IRS publication Understanding Your EIN

and you may apply online HERE - Apply for an EIN Online

 

If you still want to get ITIN from the IRS - here is the information from the IRS - http://www.irs.gov/individuals/article/0,,id=96287,00.html

 

Taxpayer Identification Number (TIN) is an identification number used by the Internal Revenue Service (IRS) in the administration of tax laws. It is issued either by the Social Security Administration (SSA) or by the IRS. A Social Security number (SSN) is issued by the SSA whereas all other TINs are issued by the IRS.

  • Social Security Number "SSN"
  • Employer Identification Number "EIN"
  • Individual Taxpayer Identification Number "ITIN"
  • Taxpayer Identification Number for Pending U.S. Adoptions "ATIN"
  • Preparer Taxpayer Identification Number "PTIN"

See more information here - http://www.irs.gov/businesses/small/international/article/0,,id=96696,00.html

Let me know if you need any help.

 

 

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Expert: LEV
Pos. Feedback: 99.3 %
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Answered: 10/24/2009

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