How does this not become taxable income? My son was recently diagnosed with a form of leukemia (3/1/18) and some friends/family have been doing some fundraising. There is a gofundme account that has raised 28k so far, along with other direct donations and there are also two local fundraisers planned. I would guess total raised would end up 35k-40k. No single person has donated over 2k, so the total is a combination of many smaller gifts. I'm married and I believe we can collect 30k (15k each) that won't be considered taxable income? Do I set up separate checking account to track expenses related to this? Do living expense and monthly bills count? Do we set up some other type of checking account? Any suggestions on what should be so the money raised isn't taxable.
For 2017 tax year you can give a gift of up to $14,000 with no gift tax return required, for 2018 it went to $15,000.
Due to son having no giver of over $2,000 your son, has received numerous gifts, with no gift tax returns required to be filed.
Note: The giver of the gift is the one that would file this and not your son.
I would set up an account in your son's name or some type of account that is for the benefit of your son with the bank or someone else you trust and trustee of the account.
The money is not taxable income to your son, as he did no work to earn the money from those who gave it. There are no expectations of future work required either.
IRC Code section 61 is the tax code that defines taxable income for a tax return.
The last question, if your son starts doing talks, speeches, or activity where he does work to get the money, then you could be entering a grey area of the Tax law where due to performing services, that could start going from tax-free to taxable income.
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Taxes and GoFundMe DonationsDonations made to GoFundMe campaigns are usually considered to be "personal gifts" which, for the most part, aren’t taxed as income.
However, there may be particular case-specific instances where the income is in fact taxable (depending on amounts received, use of the funds, etc.), so we recommend that you maintain adequate records of donations received and consult a tax professional to be sure. GoFundMe will not report your donations as income at the end of the year or issue any tax documents. Because everyone's situation is different and tax rules can change from time to time, we’re unable to give any tax advice.
Separately, there are also times when GoFundMe campaigns are created to benefit a registered non-profit organization or charity. Donations made to those campaigns may be considered eligible for a tax deduction, but you will want to consult with a tax professional to be sure. GoFundMe does not directly provide information for tax deductions. Rather, you will want to contact the benefiting charity to ask if your donation qualifies.
Source: https://support.gofundme.com/hc/en-us/articles/204295498-Taxes-and-GoFundMe-Donations
For 2017 tax year you can give a gift of up to $14,000 with no gift tax return required, for 2018 it went to $15,000.
Due to son having no giver of over $2,000 your son, has received numerous gifts, with no gift tax returns required to be filed.
Note: The giver of the gift is the one that would file this and not your son.
I would set up an account in your son's name or some type of account that is for the benefit of your son with the bank or someone else you trust and trustee of the account.
The money is not taxable income to your son, as he did no work to earn the money from those who gave it. There are no expectations of future work required either.
IRC Code section 61 is the tax code that defines taxable income for a tax return.
The last question, if your son starts doing talks, speeches, or activity where he does work to get the money, then you could be entering a grey area of the Tax law where due to performing services, that could start going from tax-free to taxable income.
-----------------------------------------
Taxes and GoFundMe DonationsDonations made to GoFundMe campaigns are usually considered to be "personal gifts" which, for the most part, aren’t taxed as income.
However, there may be particular case-specific instances where the income is in fact taxable (depending on amounts received, use of the funds, etc.), so we recommend that you maintain adequate records of donations received and consult a tax professional to be sure. GoFundMe will not report your donations as income at the end of the year or issue any tax documents. Because everyone's situation is different and tax rules can change from time to time, we’re unable to give any tax advice.
Separately, there are also times when GoFundMe campaigns are created to benefit a registered non-profit organization or charity. Donations made to those campaigns may be considered eligible for a tax deduction, but you will want to consult with a tax professional to be sure. GoFundMe does not directly provide information for tax deductions. Rather, you will want to contact the benefiting charity to ask if your donation qualifies.
Source: https://support.gofundme.com/hc/en-us/articles/204295498-Taxes-and-GoFundMe-Donations
Thank you very much for your response. It the money is already considered not taxable what would be the benefit of setting up some other type of account? Also the gofundme account has automatically been depositing into our savings account, is that an issue. If it is would just moving that money over to the new account take care of that? That total amount would be around $30k. TIA