Larger amounts tend to catch the IRS' attention. "The whole trigger would be the 1099 that GoFundMe sends you, now the 1099 is out there, the IRS gets the 1099 and they're looking for that income somewhere on your return," said O'Donnell.Įven if your paying for yours or your dog's medical bills or any other popular cause, you could end up owing Uncle Sam depending on how much you raised. While GoFundMe states on their website that most donations are considered personal gifts and are not subject to income tax, it warns every situation is different and to consult a tax expert.
"In this situation they got a letter that they owed $30 thousand worth of taxes on the money received," said O'Donnell. The couple raised $50,000 through GoFundMe but at the end of the year the IRS wanted their cut. "I had a tax client who the community raised money because one of the spouses had a serious heart attack and they raised money to help pay for their medical bills," said O'Donnell. Local CPA Chuck O'Donnell says while crowd sourcing is an easy way to raise money, you could be setting yourself up for some unexpected tax implications. "I got the call probably the same day they got the letter and they were quite panicked, quite concerned," said Chuck O'Donnell.
All in need of money for their own reasons. From campaigns for a boy's medical bills, a man's trip to study abroad, or a woman's expenses to attend an opera academy. Crowd funding or crowd sourcing has exploded in popularity.
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