GoFundMe

Not at all. 1099s are only issued by businesses not individuals, so there isn't likely to be any 1099 reporting to a GoFundMe recipient. The receipts may or may not be taxable depending on the nature of the GoFundMe campaign. If the recipient provides anything (goods or service) in return for the contribution, then the receipt is taxable income. If nothing is provided (such as a campaign to raise money for a family in need) then the funds are tax-free to the recipient, but possibly subject to gift tax for the donor.

Ira Smilovitz, EA

On Thu, 11 Aug 2016 22:42:03 EDT, ira smilovitz wrote in

I see. So the analogy is similar to the giving and receiving of gifts? However if the gift solicitation involves a lot of work, (i.e. paperwork, account setup, etc.) does that constitute what the IRS would consider a work-effort made to solicit the donation?

I've read a number of those GoGundMe solicitations and they seem to involve a lot of planning, thought and work to be effective. In my mind that is a substatial work effort provided to solicit gifts and thought it might be taxable to the solicitor.

Am I way off base here?

The work involved in setting up the GoFundMe campaign is irrelevant. What matters is whether the donors are receiving anything in exchange for the money they contribute.

Ira Smilovitz, EA

Right. It looks like GoFundMe is just a platform for others to solicit gifts (or not gifts) - the website doesn't actually run anything, so it wouldn't be responsible fot 1099's even if they were required.

Also, small nonprofits are not required to register with the IRS. Contributions may not be deductible, but the organizaition may not be required to pay tax on income related to a nonprofit purpose.

You MIGHT be onto something. For example, I remember Tax Court cases holding that panhandling income was subject to tax (and possibly SE) where the activity was "regular and continuous" and constituted the taxpayer's principal means of support.

So if a GoFundMe solicitation rose to that level of effort, I would expect similar tax results. The fact that donors receive nothing in return is not absolutely dispositive of the matter in my opinion.

The difference is that you can't be the non-profit purpose of your own nonprofit organization. If someone receives money for a purpose that does not qualify as nonprofit, and the donor does not get an equity position in the company in return, then to the recipient it would be taxable income.

And if it's more than $14,000 it could also require a gift tax return.

How can it be both taxable income to the recipient AND a gift?

Normally it's not. But if you give someone a tip in a restaurant, that is a gift of sorts (not legally owed) but it is considered taxable income. If you give money to a beggar on the street, that is also technically considered taxable income. If your employer gives you a gift that is of more than trivial value, it is also considered taxable income.

If someone who is not a friend or relative of yours, solicits money for a purpose, and that purpose does not qualify as a nonprofit purpose, it may also not qualify as a non-taxable gift.

A tip given in a restaurant is income because it is given in exchange for services provided. Legal obligation has nothing to with it. The gift to the beggar is generally not income to the beggar, but it can become income due to the intensity of the activity of the beggar.

Ira Smilovitz, EA