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I have a sister-in-law that is unable to work because she has

two disabled children. We...
I have a sister-in-law that is unable to work because she has two disabled children. We have had several people wanting to donate money to help her out, specifically to purchase a wheelchair accessible van. I approached a bank to set up a bank account for these donations. They set the account up in my name with my sister-in-law as an additional signer. The account was set up with an EIN number and they checked the "for banking purposes only" option on the SS-4 form. All money received into this account will go to help my sister-in-law purchase a handicap accessible van. I have several questions regarding this scenario. Do I have to set up a legal entity for this account? What additional forms will I be required to submit to the IRS? Will I have to file a tax return for this account? Will the donations from this account be taxable to me?
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Answered in 3 minutes by:
8/20/2013
Megan C
Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 16,592
Experience: Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
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MyVirtualCPA :

Thanks for asking your question! I'm sorry to hear about your tax issue and I'm going to try my best to help you understand or resolve it.

MyVirtualCPA :

How are you today?

MyVirtualCPA :

There is no need to file any paperwork to set up this account - you do not need a legal entity

MyVirtualCPA :

You will not submit any forms to the IRS, these are all gifts and as such are not taxable

MyVirtualCPA :

No tax will be paid on the income received, as they are gifts

MyVirtualCPA :

However, the gifts are not deductible to the donor because you are not a charity

Customer:

Great. that answers my questions.

MyVirtualCPA :

I'm glad. If you would, please rate my response as "excellent" as this will give me credit for assisting you today

Customer:

sure. no problem.

MyVirtualCPA :

Thanks!

Megan C
Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 16,592
Experience: Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
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Paul,

Thank you for requesting me directly, and thanks for the positive rating. Please come back and see me any time you need a tax, finance, or social security question answered. It was a pleasure working with you today.
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Megan C
Megan C
Megan C, Certified Public Accountant (CPA)
Category: Tax
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Experience: Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level

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