Can some friends who set up a GoFundMe for us get into tax trouble if they withdraw funds and then write us a check?

[shollis2814]

Some friends set up a GoFundMe for us for medical purposes. They didn't know our bank information, so they used theirs.  If we both keep good records, will their withdrawing the money and then writing us a check flag anything with the IRS since it would be over the maximum gift limit? The only way to switch it to our bank account would be to get a personal loan to repay all the money withdrawn so far to GoFundMe while they return and reprocess payments.

[Opus 17]

Gifts people make to the fund are not tax deductible donations, even if you are needy, and you can get in big trouble if you make statements or issue receipts that suggest otherwise.

Gifts are rarely taxable, they must be reported if more than $15,000 per person per year, but tax is not owed unless the total amount of lifetime gifts is more than $11 million.  If you and your friends are married (you said "we" and "they") then spouse #1 can give you and your spouse each $15,000, and likewise spouse #2, so the practical limit with no paperwork may be as high as $60,000.

Your friends may also get a 1099-K.  It would be up to them to keep documents showing these were gifts and the purpose of the gifts.  

If they did something as potentially dangerous as giving something back for the donations (t-shirts, other items) then they may in fact be viewed by the IRS as running a business of selling t-shirts, and be required to file a tax return with self-employment tax and other things.  But they should seek professional tax advice in that case.

[shollis2814]

OK, thank you for your answer, but maybe I didn't ask the question the right way. There are several donors to the GoFundMe. There is no individual gift  even close to $15,000. The friends are custodians of the account and they are withdrawing the money to their bank account and then writing us a check, which we use to pay medical bills. We aren't issuing receipts, etc. There's nothing like t-shirts or anything being given in return. This is just financial help for cancer bills and some hospital stays that insurance won't cover. I also apologize if I misread your answer.

[Opus 17]

I was just covering many of the possible issues that come up.

From your specific details, the documents will show that your friends are receiving gifts. They are then making gifts to you, and you are using them for medical expenses.  None of this is taxable, and in fact, you can still take a medical expense deduction (if you otherwise itemize your deductions) for expenses you pay with gifted money.

The issue for your friends is that they may receive a 1099-K from GFM, depending on the total amount of the transaction.  Although it is not taxable income, the IRS may assume it is taxable income unless they prove otherwise, so they should keep good records of everything that happens (document the original posting, emails, canceled checks and bank records of the withdrawal to them and the checks to you, etc.)