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Tax Implications of GoFundMe Donations

Picture of H&CO H&CO : Jan 17, 2023 12:16:23 PM

Tax
Tax Implications of GoFundMe Donations
Tax Implications of GoFundMe Donations
3:10

For those who don't know, GoFundMe is an American for-profit crowdfunding platform that allows people to raise money for events ranging from life events such as celebrations and graduations.

Many artists and independent authors use this platform to request donations to finance their projects, but contributors or donors often have doubts about how the contributions they make through this platform could be deducted.

Below we will try to answer the questions of several Internet users on this blog related to this topic. Please let us know your concerns so we can update the page and keep you always informed.

 

Are donations I make to GoFundMe deductible?

Its official site updated this information for 2024 and reported that donations made to a personal GoFundMe fundraiser, rather than a charity fundraiser are generally considered to be personal gifts and aren't guaranteed to be tax-deductible.

Donations made to GoFundMe charity fundraisers in the US, UK, Canada, Ireland, and Australia are guaranteed to be tax-deductible and will automatically receive tax receipts from our charity partner, PayPal Giving Fund.

>> Read: Estate Gift and tax planning for foreign assets 

 

How do you know if you're donating to a certified fundraising charity?

The official site asks to verify this by returning to the fundraiser's page. On a charity fundraiser, the name of the organization will be located next to the GoFundMe organizer's name and will include a label that says "Tax Deductible."

The IRS has strict rules about what kind of charitable donations merit a tax deduction or not.

Do I need to pay gift taxes on the money I donate?

Another common question is whether the famous "gift tax" in the United States must be paid for carrying out this action. 

If you donate over $18,000 (or $36,000 if filing jointly) to a crowdfunding campaign that isn't managed by a qualified charity in 2024, you must be aware that you're required to file a federal gift tax return.

While this doesn't automatically mean you'll owe federal gift tax—few people actually end up paying it—you must report your generosity to the IRS when tax season arrives. Stay informed and ensure you comply with tax regulations.

>> Read: Seven Reasons Why You Should Choose a CPA

Does it cost anything to create a fundraiser?

Starting and managing a fundraiser on GoFundMe is free. To cover payment processing, the platform charges a transaction fee of 2.9% + $0.30 per donation.

If donors make recurring donations, they pay a 5% fee per donation to help make this feature possible for their community.

Fee example: If a donor makes a $50 donation to a US fundraiser, the person receiving the funds will receive $48.25 after transaction fees (2.9% + $0.30) are deducted.

 

It is important to always consult with your trusted CPA. This blog is merely informative to keep you up to date, but each case and estate is different so your accountant will know what is best for you.

 
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