gofundme reporting

[jsspbusiness]

I see several answers saying that gofundme contributions do not need to be reported but that seems to be contrary to other things I have seen.

Our daughter created a gofundme to raise money for her quartet to hire composers to commission new music. None of the funds were used for her personal benefit. Does she need to report these funds? Is there a form to provide that says the funds were transferred to another entity and not directly as income for her?

[Bsch4477]

• You are correct that the income must be reported. Report as other income and then report again the same amount as a negative amount with the explanation Gofundme. The income will then be zeroed out. 

[jsspbusiness]

I guess I'm not quite sure where the second (negative) reporting is supposed to go. It there a special line number for adjustments? I don't have the tax forms open at the moment so it may become obvious when I have them available. 

[Bsch4477]

The second is a duplicate of the first, only with a negative value. 

[Opus 17]

Is the quartet filing a business tax return?  It should, if it receives income for services, and has business expenses like commissioning new works.  Probably a partnership return form 1065, which would issue a K-1 statement to each of the partners that goes on the partners' individual tax returns.  The quartet would also need its own separate federal tax ID number, and the quartet's number should be used for future fundraising efforts.  

[jsspbusiness]

I'm not sure what the plans are for filing for the quartet. That is handled as a group effort by the members.

[jsspbusiness]

I'm not questioning the process, but it seems strange that numbers are being introduced with no real explanation of what had taken place.

[Opus 17 · Accepted solution]

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@jsspbusiness wrote:

I'm not questioning the process, but it seems strange that numbers are being introduced with no real explanation of what had taken place.

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So, if your daughter gets a 1099-K (which seems to be the case) but the income is not hers, it was just passed through her name, there are two official procedures to report it, and one semi-official procedure. All three methods deal with the problem that, if your daughter got a 1099-K and does not report it somehow, the IRS will see that is additional income and send a bill for taxes.  You have to report it, and deal with it, in "writing" on the tax return, to show why it was reported as income but is not in fact income. 

1. If filing by mail, leave the 1099 off the tax return.  Attach a copy of the 1099-K and a written explanation of why it is not income to the rest of the return and mail it in.

2. If e-filing, report the income as miscellaneous other income on line 8z of schedule 1.  Include a brief explanation (about 1 sentence).  Then, report the same amount as an offset on line 24z of schedule 1, with a brief explanation.  You can access line 24z using Forms Mode in Turbotax Desktop (the program installed on your own Mac or PC).

3. Because line 24z of schedule 1 is not accessible when using Turbotax online, the semi-official workaround is to enter the income as miscellaneous other income on line 8z, then enter a duplicate item of income with a minus sign, which will also go on line 8z and cancel out the income.  It's not technically correct, but seems to be an acceptable workaround.

[jsspbusiness]

There was no 1099K issued

[Opus 17]

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@jsspbusiness wrote:

There was no 1099K issued

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In that case, and assuming it was all passed on to the quartet and the quartet properly reports the income on its tax return, you can ignore it on your return, but keep all the paperwork for at least 3 years in case of audit (copy of the solicitation, record of funds received, proof it was all sent to the quartet, and so on.)

And I would really want to make sure the quartet's taxes are being reported properly.  Your daughter should have some kind of tax paperwork from the quartet that is added to her personal return.  If the quartet is not filing properly, all the members are at risk.  For example, if the quartet is a partnership, it is required to file a form 1065 partnership return. The due date is March 15, not April 15 (unless they have an extension) and the penalty for late filing is $195 per month per partner.