Cash News
Crowdfunding platforms like GoFundMe are popular tools for raising money. But whether you’re on the giving or receiving end of these fundraisers, it’s important to understand the tax consequences of a campaign.
The good news is, if you’re the beneficiary of a GoFundMe campaign, you typically won’t owe taxes on the money you receive, provided that you follow certain IRS rules. The bad news: If you donate to a campaign, you probably won’t qualify for a tax deduction. Read on to learn how GoFundMe taxes work, whether you’re receiving money or donating to a campaign.
Read more: Here are 7 free tax filing options
How charitable deductions work
To understand whether your GuFundMe contribution is tax-deductible, first, you need to understand how charitable deductions work. If you itemize your tax return, you may be able to deduct certain charitable contributions. A tax deduction lowers your taxable income, meaning you’ll ultimately owe less to the Internal Revenue Service.
But, for itemizing to make sense, all of your deductions — which can also include things like mortgage interest and unreimbursed medical bills — have to add up to more than the standard deduction for your filing status, which is the amount any taxpayer can deduct regardless of their actual expenses.
In the 2023 tax year (for which returns are due April 15, 2024), the standard deduction is $13,850 for single filers and $27,700 for married couples filing a joint return. These amounts will increase to $14,600 and $29,200, respectively, for tax year 2024. Nearly 90% of taxpayers take the standard deduction instead of itemizing, which means they aren’t eligible to deduct charitable contributions.
If you itemize, you can generally deduct charitable contributions of up to 60% of your adjusted gross income. But a 20%, 30%, or 50% limit may apply in some situations.
Are GoFundMe contributions tax deductible?
GoFundMe has two types of fundraising campaigns: personal and charity. Usually, only donations to charitable fundraisers are tax-deductible.
Many of the campaigns you see on crowdfunding platforms (Kickstarter is another popular one) and social media are personal fundraisers. For example, you may see a campaign to help someone facing large medical expenses or a loved one’s funeral costs, or someone who needs to replace their belongings after their home was destroyed. Contributions to these fundraisers are usually considered personal gifts and aren’t guaranteed to be tax-deductible charitable donations. Donors to personal campaigns won’t receive a tax receipt from GoFundMe.
However, if you make a contribution to a certified charity fundraiser, GoFundMe guarantees your donation will be tax-deductible in the United States, Canada, United Kingdom, Ireland, and Australia. You’ll automatically receive a tax receipt from GoFundMe’s registered charity partner, PayPal Giving Fund. You can also make tax-deductible donations through GoFundMe Causes, which allows you to contribute to tax-exempt organizations and verified fundraisers in support of specific themes like education, the environment, or animal rescue.
PRO TIP: Check the fundraiser page if you donated to a GoFundMe campaign and aren’t sure whether the fundraiser was a personal or charitable campaign. For charity fundraisers, the name of the nonprofit or charitable organization will appear next to the organizer’s name.
What about gift taxes?
When gift taxes apply, they’re always paid by the donor, rather than the recipient. Though donations to personal GoFundMe campaigns are usually considered gifts, you probably don’t have to worry about paying federal tax on those GoFundMe gifts.
That’s because something called the annual gift exclusion applies. You can make gifts to an unlimited number of people up to the annual gift exclusion, which is $18,000 in 2024.
But even if you give more than $18,000 to someone’s personal GoFundMe fundraiser in 2024, it’s unlikely that you’ll owe gift taxes. You’ll simply have to let the IRS know by filing a gift tax return.
To owe gift taxes, the personal gifts you’ve made over your life would need to add up to more than the lifetime exclusion amount, which is $13.61 million in 2024.
Is my GoFundMe campaign taxable?
If you organize a GoFundMe campaign to benefit someone else, the money you raise won’t be taxable as long as you distribute the funds to the campaign beneficiary.
Being the beneficiary of a GoFundMe campaign probably won’t result in a tax bill, either. Donations to a crowdfunding campaign that’s meant to benefit an individual are usually treated as personal gifts and aren’t subject to income tax.
However, there are a couple of situations where money raised through GoFundMe could be treated as taxable income. If donors received something of value for giving money — which is common when small businesses raise funds through crowdfunding — the money could be taxable. For example, if you’re raising money for your small business and you reward contributors with a T-shirt or magnet, you’ll most likely need to report the proceeds as business income.
Another situation when you could owe taxes on your GoFundMe campaign arises if your employer donates. Generally, any contributions your employer makes for your benefit need to be included in your gross income.
If you receive more than $600 from a crowdfunding campaign, the platform may send you IRS Form 1099-K, which is used to report income from third-party payment apps and online marketplaces, as well as credit cards, debit cards, and gift cards. Getting Form 1099-K from GoFundMe or another crowdfunding site doesn’t necessarily mean you owe taxes. But you’ll still need to report the income when you file your taxes.
PRO TIP: The IRS recommends that both organizers and beneficiaries of crowdfunding campaigns maintain records about the campaign and disbursement of funds for at least three years.
The bottom line on GoFundMe donations and taxes
If you’re the beneficiary of a GoFundMe campaign, you’ll want to consult with a tax professional before filing your return. It’s essential to be sure that you’re following all the rules so that you won’t be hit with an unexpected tax bill. You’ll also want to seek advice about what records and tax documents you should keep in case the IRS has questions about the campaign.
Donors may also want to seek advice from a professional, like a CPA, in some cases. If you’re taking the standard deduction and contributed $25 or $50 to a GoFundMe campaign, using tax filing software may be sufficient because your donation wouldn’t affect your taxes. But if you made contributions to a GoFundMe that are substantial enough to have tax consequences, enlist the help of a professional. A tax preparer can analyze your tax situation and help you determine whether your contributions are tax-deductible and, if applicable, how to maximize the value of your deduction in your tax planning.
Frequently asked questions
Is GoFundMe a 501(c)3?
GoFundMe is a for-profit company, not a 501(c)3 organization. However, it partners with and supports GoFundMe.org, which is an independent 501(c)3 organization, also known as a qualified charitable organization, that manages GoFundMe Causes fundraisers.
Do people have to pay taxes on money raised from GoFundMe?
Usually, when you receive money from a GoFundMe campaign for personal expenses, like a medical bill or funeral costs, it’s considered a gift and isn’t taxable. But there are a few exceptions: If donors received something of value when they contributed or your employer donated, you could face tax liability.
How much money can a person receive as a gift without being taxed?
When gift taxes apply, they’re paid by the person making the gift, rather than the person receiving the gift. You can make gifts up to the annual exclusion amount ($17,000 in 2023 and $18,000 in 2024) to an unlimited number of people. If you make gifts above these thresholds, you’ll need to file a gift tax return. However, gift taxes only apply to those who give away millions of dollars in their lifetimes.