Thank you Bsch4477 and Opus 17.
"The other option is to leave the 1099 off of your return and filed by mail. Attach a copy of the 1099 and a brief written statement explaining why this does not represent taxable income to you."
Just wanted to get clarification on this: Basically you are saying do not enter any numbers in the tax return from the 1099, but still include a copy of the 1099, with the explanation, right?
"The other concern to raise is that money that is gifted directly to pay for someone else’s medical expenses is never a charity donation, even if the person is needy. Hopefully you were not giving donation receipts that indicated this was a tax deductible medical or charity donation, if you did, you could be in serious difficulty later."
I should have been more clear on this - maybe donation is not the right word. No, we did not give out receipts or imply in any way that this was a medical or charity donation. So maybe to use the right terminology in our statement to IRS we should refer to this as "support funds" instead of "donations?"
