Tax

Have a Tax Question? Ask a Tax Expert

Ask an Expert,
Get an Answer ASAP!

Tax
This answer was rated:

I have read that gofundme and other crowdfunding sites are

classified "gifts" and they are...
I have read that gofundme and other crowdfunding sites are classified "gifts" and they are not taxable to the recipient. Is that true and is there a limit on the amount received? for example, if someone received a million dollars as "gifts" is any of the million dollars taxable? Also, if they then turned around and donated the million dollars to different charities, is that ok with out any tax consequences?
Show More
Show Less
Ask Your Own Tax Question
Customer reply replied 6 months ago
If you can explain both federal and state tax issues that would be appreciated.
Answered in 13 minutes by:
5/22/2017
Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 12,973
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
Verified

The taxation depends on the use of the funds. If you are using the money to fund a business or any pursuit of profit, IRS treats this as Gross income to that business. (and state's returns start with Federal AGI, so mirrors)

...

I Just helped a client who came to me after IRS re-characterized money he was treating as gifts, as income.

...

No cases or IRS rulings directly address the taxability of contributions to a crowdfunding project. Accordingly, whether crowdfunding contributions received are includible in income must be determined by the application of general tax principles.

...

There HAS been ONE information letter re: this from IRS.

...

In the Information Letter, IRS concluded that generally, money received without an offsetting liability (such as a repayment obligation), that is neither a capital contribution to an entity in exchange for a capital interest in the entity nor a gift, is includible in income. The facts and circumstances of a particular situation must be considered to determine whether the money received in that situation is income.

...

What that means is that crowdfunding revenues generally are includible in income if they are not:

1. loans that must be repaid;

2. capital contributed to an entity in exchange for an equity interest in the entity

Ask Your Own Tax Question

In addition, crowdfunding revenues must generally be included in income to the extent they are received for services rendered or are gains from the sale of property

...

IRS Information Letter 2016-0036

Ask Your Own Tax Question

Please let me know if you have ANY questions at all, before rating me.

I hope you’ll rate me (using those stars, or faces on your screen, and clicking submit) based on thoroughness and accuracy, rather than any good news / bad news content.

Otherwise I’ll receive no compensation at all, from JustAnswer.

Thank you!

Lane

..

I hold a law degree, with concentration in Tax Law, Estate law & Corporate law, an MBA in finance, a BBA, and CFP & CRPS (Chartered Retirement Plans Specialist) designations, as well - I’ve been providing financial, Social Security/Medicare, estate, corporate, non-profit, and tax advice to clients on three continents since 1986

Ask Your Own Tax Question
Customer reply replied 6 months ago
Hi Lane, here is the specific example if you can please elaborate - a site is set up to receive money as a gift in order to accumulate a pool of money to then be donated to charities. 100% of the money received would go to a variety of charities. If you can be specific as possible it would be highly appreciated for both federal and state taxes.

You'd simply want to account for the amounts that went to charities, retain proof that the dollars were donated.

...

You will get a 1099-K if there is more than 20,000 in receipts and 200 transactions, so IRS WILL be looking for proof that the money was donated.

...

Likely they'll say that you need to BE a 501(c)(3) non-profit yourself, to accomplish this.

...

You'll need to file form 1023 - and state your purpose/mission and part of that wold need to include WHY the individuals would donate to you rather than directly to the charity.

...

For the individuals to take a tax deduction they would need that receipt from the charity (either you as a non-profit or go direct TO the charity)

...

You might want to read this:

...

https://www.irs.gov/uac/eight-tips-for-deducting-charitable-contributions

...

And this:

...

https://www.irs.gov/charities-non-profits/applying-for-tax-exempt-status

Ask Your Own Tax Question
Customer reply replied 6 months ago
Thanks Lane. So basically there is no specific answer? If I had records of every penny received was donated, even with or with out being a 501(c)(3) I could basically be taxed if the IRS wanted?

Not if you prove that these were gifts and you simply passed through to the charities.

...

But doing THAT takes away the possibility of the donors getting a tax deduction. They MUST have acknowledgement of the donation from the charity

...

So sorry

Ask Your Own Tax Question
Customer reply replied 6 months ago
Thanks Lane. Your last response was somewhat helpful as I am 1000% sure I can prove the gifts were passed through to charities. The only aspect if I choose not to be a 501(c)(3) is the person gifting would not be able to have a deduction on their taxes.

That's right. If there's no pursuit of profit, and the donors are simply giving you a gift with no expectation of anything in exchange - then it IS a gift - but, yes, no deduction for them that way.

...

There IS now a 1023 EZ ... (you would see that in one of the IRS links above) a simplified way to apply for non-profit status

...

If this HAS helped, and you DON’T have other questions … I'd appreciate a positive rating (using the stars or faces on your screen, and then clicking “submit")

...

But if you need more on this, please let me know.

Lane

Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 12,973
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
Verified
Lane and 87 other Tax Specialists are ready to help you
Ask your own question now
Customer reply replied 6 months ago
Thank you Lane. I was unaware of the 1023 EZ. I will take a look. Thank you very much for your replies!!
Ask Lane Your Own Question
Lane
Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 12,973
12,973 Satisfied Customers
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986

Lane is online now

A new question is answered every 9 seconds

How JustAnswer works:

  • Ask an ExpertExperts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional AnswerVia email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction GuaranteeRate the answer you receive.

JustAnswer in the News:

Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.

What Customers are Saying:

I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response...

T.G.WMatteson, IL

I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight.

BonnieChesnee, SC

Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation.

JohnMinneapolis, MN

Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with.

OrvilleHesperia, California

Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help.

Mary C.Freshfield, Liverpool, UK

This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!!

AlexLos Angeles, CA

Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult.

GPHesperia, CA

< Previous | Next >

Meet the Experts:

Wallstreet Esq.

Wallstreet Esq.

Tax Attorney

586 satisfied customers

10 years experience

Mark D

Mark D

Enrolled Agent

1,300 satisfied customers

MBA, EA, Specializing in Business and Individual Tax Returns and Issues

Richard

Richard

Tax Attorney

4,336 satisfied customers

29 years of experience as a tax, real estate, and business attorney.

Robin D.

Robin D.

Senior Tax Advisor 4

13,906 satisfied customers

15years with H & R Block. Divisional leader, Instructor

Megan C

Megan C

Certified Public Accountant (CPA)

8,651 satisfied customers

Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level

jgordosea

jgordosea

Enrolled Agent

2,885 satisfied customers

I've prepared all types of taxes since 1987.

R. Klein, EA

R. Klein, EA

Enrolled Agent

1,839 satisfied customers

Over 20 Years experience

< Previous | Next >

Related Tax Questions
Assuming a Medicare tax rate of 1.45% and monthly gross
Assuming a Medicare tax rate of 1.45% and monthly gross wages of $2,500, the amount recorded in Medicare Tax Payable for one quarter for the employee's payroll deduction is… read more
taxmanrog
taxmanrog
Master\u0027s Degree
715 satisfied customers
Self employed, Im wondering if inmigration uses gross income
Self employed, Im wondering if inmigration uses gross income or net income for their figures... I make about 70,000 gross income on 1099 but after deductions net income is about 32,000.. we are a fami… read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
I am considering filing as an Non-Profit for the tax
i am considering filing as an Non-Profit for the tax advantage but do not know that it would work for me. I am just using this as a tax shelter as I will be owing lots more money in taxes as a single … read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
13,906 satisfied customers
Do you know non profit tax law? California. The 501(c) 3 has
Do you know non profit tax law? JA: Can you tell me where the nonprofit is registered? Customer: California JA: Has anything been officially filed? If so, what? Customer: The 501(c) 3 has existed sinc… read more
Lane
Lane
JD, CFP, MBA, CRPS
12,973 satisfied customers
Regarding Federal tax income Form 4952, should I expect my
Regarding Federal tax income Form 4952, should I expect my client to provide me a form to help me fill out line 1 for "investment interest expense paid"? And if so what is the form number?… read more
abci168
abci168
Principal
27 satisfied customers
Form 8300. We are doing a business to business transaction.
We are doing a business to business transaction. The form is not clear on how to compete. Do we complete Part I f … read more
Lane
Lane
JD, CFP, MBA, CRPS
12,973 satisfied customers
Problem from South Western federal taxation comprehensive
Problem from South Western federal taxation comprehensive volume 2012 Appendix E problem 2. Can you do my tax return(individual) assignment by tomorrow midnight? I'll send you the problem by email asa… read more
wm030303
wm030303
Partner
Bachelor's Degree
110 satisfied customers
Form 886-A Deductible Home Mortgage Interest Taxpayer has
Form 886-A Deductible Home Mortgage Interest Taxpayer has $1,000,000 in Grandfathered debt. Line 9 Form 886-A - is this line amount after deducting the garandfathered debt… read more
Lane
Lane
JD, CFP, MBA, CRPS
12,973 satisfied customers
Dose mean can not deduct state income taxes only or dose it
dose mean can not deduct state income taxes only or dose it includes property taxes too … read more
Lane
Lane
JD, CFP, MBA, CRPS
12,973 satisfied customers
What are tax implications when docating small IRS to state
What are tax implications when docating small IRS to state university … read more
Lane
Lane
JD, CFP, MBA, CRPS
12,973 satisfied customers
Given that the current 1041 tax rate on 401(k) income is
Given that the current 1041 tax rate on 401(k) income is $3206 + 39.6% over $12,400, what will be the new tax rate and will it apply for 2017?… read more
PDtax
PDtax
Owner
Master\u0027s Degree
1 satisfied customers
I run a non-profit that lost its status due to not filing
I run a non-profit that lost its status due to not filing 990. We are still in business. Can I sell the business since it is not technically a non-profit now and the new owner operate under a new non-… read more
Lane
Lane
JD, CFP, MBA, CRPS
12,973 satisfied customers
What are the federal and Oregon state taxes on profit of
What are the federal and Oregon state taxes on profit of sale of my home. My wife and I are age 81 and 77 respectively. I expect the profit will be about $400,000. … read more
abci168
abci168
Principal
27 satisfied customers
What would the federal and state tax rate percentages be for
What would the federal and state tax rate percentages be for a $7700 IRA early withdrawal in Ohio?… read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,557 satisfied customers
Can house maintenance and property taxes be deducted on form
Hello. Can house maintenance and property taxes be deducted on form 1041 for a house owned by decedent prior to the Executors selling it? … read more
Lane
Lane
JD, CFP, MBA, CRPS
12,973 satisfied customers
Same question on the taxation of interest and dividends (on
Same question on the taxation of interest and dividends (on mutual funds) earned inside a disclaimed portion trust ... disclaimer trust . The original owner of a trust passed and the spouse declined a… read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
Do you have knowledge on tax laws regarding non profit
Do you have knowledge on tax laws regarding non profit donations and so forth? … read more
Chad CFP ®
Chad CFP ®
Certified Financial Planner(R), Pro
Master\u0027s Degree
834 satisfied customers
We are donating a 99 year lease of 5 acres to a non-profit.
We are donating a 99 year lease of 5 acres to a non-profit. The current value of the 5 acres is probably worth about $100,000. after the land is appraised, can we declare a contribution of the value o… read more
Lane
Lane
JD, CFP, MBA, CRPS
12,973 satisfied customers
Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Show MoreShow Less

Ask Your Question

x