Taxing GoFundMe Donations
"I'm going to post this as an answer because it's from the GoFundMe website, but ultimately even they say to speak with a tax professional about it.  Am I responsible for taxes? (US Only) While this is by no means a guarantee, donations on GoFundMe are   simply considered to be ""personal gifts"" which are not, for the most   part, taxed as income in the US. However, there may be particular,   case-specific instances where the income is taxable (dependent on   amounts received and use of the monies, etc.).     We're unable to   provide specific tax advice since everyone's situation is different   and tax rules can change on a yearly basis. We advise that you   maintain adequate records of donations received, and consult with your   personal tax adviser.     Additionally, WePay will not report the funds   you collect as earned income. It is up to you (and a tax professional)   to determine whether your proceeds represent taxable income. The   person who's listed on the WePay account and ultimately receives the   funds may be responsible for taxes.     Again, every situation is   different, so please consult with a tax professional in your area. https://support.gofundme.com/hc/en-us/articles/204295498-Am-I-responsible-for-taxes-US-Only- And here's a blurb from LibertyTax.com which adds to the confusion, but enforces the ""speak with a professional"" idea: Crowdfunding services have to report to the IRS campaigns that total   at least $20,000 and 200 transactions. Money collected from   crowdfunding is considered either income or a gift. This is where things get a little tricky. If money donated is not a   gift or investment, it is considered taxable income. Even a gift could   be subject to the gift tax, but that tax applies only to the gift   giver. Non-Taxable Gifts These are donations made without the expectation of getting something   in return. Think of all those Patriots’ fans who gave money to   GoFundMe to help defray the cost of quarterback Tom Brady’s NFL fine   for Deflategate. Those fans aren’t expecting anything in return –   except maybe some satisfaction -- so their donations are considered   gifts. Under IRS rules, an individual can give another individual a   gift of up to $14,000 without tax implications. So, unless a Brady fan   is particularly generous, his or her GoFundMe gift won’t be taxed. Taxable Income Now consider that same Brady fan donating $300 to a Patriots’ business   venture. If the fan receives stock or equity in the company in return   for the donation, this is considered an investment and is not taxable   . However, if the business owner does not offer stock or equity in the   company, the money donated could be considered business income and the   recipient would need to report it on a tax return. https://www.libertytax.com/tax-lounge/two-tax-rules-to-know-before-you-try-kickstarter-or-gofundme/" The $20k limit seems to be (from another answer) the threshold for GoFundMe to report the campaign. However, such a report does not change the taxability of the income. The income is either taxable or non-taxable regardless of whether the amount is $19,999 or $20,001. This is a common misconception, commonly seen when people think that income or gambling winnings are not taxable below $600, when in reality $600 is the threshold for issuing a Form 1099. Given that, it would be foolish to close a wildly successful (*) GoFundMe campaign, because closing the campaign won't change the taxability of the income. But it will probably cut off the continued donations you may have received. With the amount of money at stake, you should spend the couple hundred dollars to hire a CPA to look at your specific situation. Your uncle's comments are not specific to your situation at best, incorrect at worst, so don't hire him. (*) I don't know what the median GoFundMe campaign raises, but I strongly suspect it's well below the $20k/200 donor reporting limit. Just because you have one campaign that's gone viral enough to approach that limit, doesn't mean if you close that one and start a new one, that it will go viral again, especially if it's under a new username. "To echo part of stannius' response. If it's taxable, there would be tax on $19,999, just a bit less than on $20,000. Your uncle may have a credential, and members here may not, but still he may be mistaken. Or he could be giving you advice on how to skirt the law.  The taxability and the $20,000 threshold are unrelated! Trying to 'avoid' the   $20,000 is a completely misplaced effort. Gifts from anyone are not taxable to the recipient. So long as nothing is received in return, it's not taxable income to her. In contrast a blogger with a ""tip jar"" is soliciting money in exchange for advice, entertainment, etc. that's taxable. Donations to individuals, in the circumstance you describe are not income to her, nor are they deductible to the donor.  Edit - a fellow blogger (more than that, she's my tax crush) had an article Cancer survivor gets $19,000 tax bill for GoFundMe donations which may render my answer incorrect. Other article on this story suggest that the IRS is notified, but the nature of the transfer needs to be addressed.  In my opinion, you should find a new uncle CPA." From WePay (GoFundMe's payment processor) support. I received only gifts and donations.  Will I receive a Form 1099-K?   As of 2015, the IRS has clarified that WePay is not required to send    a Form 1099-K with respect to payments that are made solely as gifts   or donations.  The purpose of Form 1099-K is to report payments for   the provision of goods or services, which may be subject to tax.   Gifts and donations typically are not reported as income by recipients,   so it is not necessary to send them a Form 1099-K.   https://support.wepay.com/hc/en-us/articles/203609483-Tax-Reporting
"If you only have to pay 23k federal taxes on 100k, that means you are in the long term capital gains tax rate, which is the lower of the tax rates available. First you get your federal income tax marginal tax rate, and then find the matching long term capital gains tax rate. For example, if your marginal federal income tax rate is 28%, your capital gains tax rate would be 15%. Or rather, if the amount of the gain would put you in the 28% rate, then your long term capital gains tax rate is 15%. You can reduce that by having more losses. If you have anything else invested anywhere that is taking a loss, then you can sell that this year and it will offset the other gains you have realized. The only note is that your losses have to be long term capital losses too. Tax loss harvesting takes this to an extreme where you sell something at a loss to lock in the tax loss, but you didn't really want to get rid of that investment, so then you buy a nearly identical investment. ie. if you owned shares of ""Direxion Tech Sector ETF"" and it was at a loss, you would sell that and then immediately buy ""ProShares Tech Sector ETF"", the competing product that does the exact same thing. Then there is charity. This still requires spending money and you not having it any longer. If you feel that a cause can use the money more directly than the US government, you can donate an appreciated asset to the charity - not report a gain and also take a charitable deduction." I don't understand the logic in the other answer, and I think it doesn't make sense, so here is my take: You pay taxes on income, not on sales price. So if you put X $ of your own money in the account and it becomes X + Y $ in the future, at the moment of liquidation, you will own taxes on the Y $. Never on the X $, as it was your own (already taxed) money to begin with. The difference between long-term and short-term gains just influences the tax rate on Y. If you donate the gain alone (the Y $) to charity, you can deduct Y from your tax base. So adding Y to your tax base and then deducting Y again obviously leaves your tax base at the old value, so you pay no extra taxes. Which seems logical, as you didn't make any money in the process. Aside from extreme cases where the deductible gain is too large a percentage from your income or negative, I don't see why this would ever be different. So you can take your original 100 $ back out and donate all gains, and be fine. Note that potential losses are seen different, as the IRA regulations are not symmetric. Standard deduction is $6300, and exemption is $4050, totaling $10,350. (For 2016) Twice this for a couple ($20,700). The tax on money just above this is 10%, so the few thousand above will be taxed at a few hundred dollars. Where are you getting the number you showed? Can you edit your question to clarify exactly what you are asking? If the charity accepts stock, you can avoid the tax on the long term cap gain when you donate it. e.g. I donate $10,000 in value of Apple. I write off $10,000 on my taxes, and benefit with a $2500 refund. If I sold it, I'd have nearly a $1500 tax bill (bought long enough ago, the basis is sub $100).  Any trading along the way, and it's on you. Gains long or short are taxed on you. It's only the final donation that matters here.  Edit - to address Anthony's comment on other answer - I sell my Apple, with a near $10,000 gain (it's really just $9900) and I am taxed $1500. Now I have $8500 cash I donate and get $2125 back in a tax refund. By donating the stock I am ahead nearly $375, and the charity, $1500. You do actually have some profits (whatever is left from donations). The way it goes is that you report everything on your Schedule C. You will report this: Your gross profits will then flow to Net Profit (line 31) since you had no other expenses (unless you had some other expenses, like paypal fees, which will appear in the relevant category in part II), and from line 31 it will go to your 1040 for the final tax calculation. If I donate $10,000 to charity then I can deduct that $10,000 from my income and not pay income taxes on it.  So if I make $50,000 a year then I will only pay income taxes on $40,000 instead of $50,000 since I donated $10,000 to charity.  This is what is meant when charity contributions are said to be tax deductible. Don't feel like you have to donate to charity.  You owe no one anything.  You do more for others by working (assuming you work in the private sector). If you know of someone personally that is in need of aid then you could give them some help directly.  I find this more effective then blindly dumping money in a bureaucratic, inefficient charity.  I also find there are very few people in need of charity. Personally, I think charity donations are a way for people to feel good about themselves.  They rarely care if their donations are effective. I see two ways you can handle this. Use the gifts for the purpose of creating more free software.  This is fundraising, and your cause is writing free software.  The language is a little tricky from the PayPal Donate button (emphasis mine): This button is intended for fundraising. If you are not raising money   for a cause, please choose another option. Nonprofits must verify   their status to withdraw donations they receive. Users that are not   verified nonprofits must demonstrate how their donations will be used,   once they raise more than $10,000 USD. You don't have to be a nonprofit; they are only requiring existing nonprofits to verify their status.  You don't even have to account for the donations if they are below $10,000. Give out your PayPal email address and instruct the gift-givers to simply send you money through their PayPal interface.  They can mark it as a gift when they send the money. I think option one is how the various bloggers and other personal users are justifiying their collection of donations, and I think its a valid use of the PayPal Donate button. "Donate buttons are meaningless with regards to taxes. This is payment for something you provided, and you cannot claim that you've received a gift. Any money you receive in this way is payment for your software. Remember, for gifts - no consideration should have been provided to the donor. Anything for which a consideration was provided - cannot be a gift. In your case the consideration is the software, and it's value is the amount you were paid. Since every person can decide how much to pay you on his own - any payment is for the software, not a gift. Any money you get is taxable to you, and you cannot claim it as ""gifts"" without exposing yourself to risks of making fraudulent claims. Consult a licensed tax adviser (EA/CPA licensed in your State) for a qualified tax advice." Since you aren't contributing enough to count your parent as a dependent, there is no tax benefit to you for helping them. Gift tax is paid by the giver when total gifts to an individual exceed $14k/year and the lifetime exclusion of $5.49M has been exceeded. If your annual gifts exceed $14k (subject to change, as is the lifetime exclusion amount) then you have to file Form 709 with your return, but you will not pay gift tax unless you've both exhausted the lifetime exclusion and gift over $14k/year. If you pay medical bills directly, that amount does not count toward the $14k/year limit, so you could likely assist in excess of $14k/year and still avoid having to file the extra form. Most assistance programs are income-based, and gifts do not count toward income, but you'll want to check on the specific requirements for programs they are enrolled in. Every tax dollar that is withheld from the government is a dollar not spent on death showers around the world.  Taxation is immoral and necessary for war.  I'll gladly easy at BK after hearing this.  I'm proud of them. How is taxing them preventing a donation to their charity of choice? It isn't one or the other. You can be taxed and voluntarily charitable.   The whole GOP point, though, is to make it ALL voluntary charity so if they give, they get to decide who deserves their money and they deserve a big fat tax deduction. A rather good IRS paper on the topic states that a donation of a business' in-kind inventory would be  Under IRC 170(e)(1), however, the fair market value must be   reduced by the amount of gain that would not be long-term capital gain if the   property had been sold by the donor at the property's fair market value (determined   at the time of the contribution). Under this rule, deductions for donated inventory   are limited to the property's basis (generally its cost), where the fair market value   exceeds the basis.  There are references to IRC regulations in a narrative context you may find helpful: This paper goes on for 16 pages describing detailed exceptions and the political reasons for the exceptions (most of which are concerned with encouraging the donation of prepared food from restaurants/caterers to hunger charities by guaranteeing a value for something that would otherwise be trashed valueless); and a worked out example of fur coats that had a cost of goods of $200 and a market value of $1000. "I know your pain oh, so much.  I literally have a 14 gallon rubbermaid container FULL of solicitations I have received.  Even worse, for-profit fundraising companies send most of those mailings! They take the money, and deduct their ""expenses"", rigged to consume almosts all your gift.  Some companies have been caught passing as little as 9% to the charity.  First let's talk about a few issues.  Authentication.  Is that outfit really a tax deductible 501c3 charity?   Address.   Is this their genuine address, or is it the dropbox of a scammer or one of those evil for-profit fundraising companies?  Acknowledgement.   For gifts over a certain size, you need a thank-you letter from them to show the IRS that you really donated.  Will you get it?  The limit is $250 (no letter, deduction rejected) but as a practical thing, it helps in an audit to show as many donation letters as possible.  Charities cannot issue them retroactively, but can issue you second copies of ones they sent previously. If the charity drops the ball, you lose.  Obviously enough, you go to the post office and spend $1 on a money order.     This does not authenticate them as a charity. It does not assure it goes to their real address.  You can do both these things yourself, by checking their data on the IRS website or on guidestar.org. You don't get an acknowledgement.  I mention these because donation websites work much the same way. DAFs require a higher one-time commitment but are much simpler and more efficient after that. If you are planning to give $5000 in a single year, save it up and open a Donor Advised Fund account.  A DAF is itself a charity.   You donate to the DAF, and take the tax deduction for charitable contributons.  Then, you tell the DAF to donate it to other charities on your behalf, or anonymously.   Their concept is, you use the DAF as a ""buffer"" so you can easily make the tax-deductible donation when you need to for tax purposes, then at your leisure research charities and support them.  However, I asked my DAF - most people donate and then immediately re-donate the money, leaving the fund at zero balance.  My DAF doesn't mind that at all, and they charge zero fees for this.   (Its expenses are paid by those of us who leave money sitting around in the DAF.  Mine charges 0.6% a year.  This money can be invested sort of like in a 401K, and each investment also has an expense ratio, such as 0.18% a year in my chosen index fund.)  Websites like ""justgive.org"" will take any amount of your money and re-donate it to the charity you select.   They deduct 3-5% for their expenses (notably paper, stamps, and the 2-3% it costs them to process your credit card)." You're right.   That's a large part of what I talked about in my post, I just didn't call it that.  The other provision of Title III (aka CROWDFUND Act) is that all the equity has to be purchased through a brokerage or funding portal. I mentioned those in another post in this thread. I don't see any Chicago comments, which seems weird as it has access to both Atlantic Ocean/east coast shipping via St lawrence seaway and the Gulf/south via the Mississippi. One of the largest airports in the world in O'hare (not to mention Midway). It's the economic hub of the midwest, Google already has a large operation here along with many other tech/industrial companies.