GoFundMe | IRS Rules

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GoFundMe is an online platform that anyone can create to raise money for a family member’s cancer treatments, college tuition, new church building, or other cause. Anyone who makes a donation can obtain an official-looking receipt for tax purposes. Are these donations eligible for a charitable deduction? The short answer is no.

The government has very strict standards for organizations that can accept tax-deductible donations, known as 501(c)(3) organizations, from the section of the Internal Revenue Code that governs them. Setting one up and following the rules is a complicated process. Chances are someone raising money to finish their Master of Fine Arts in weaving has not gone through the process.

This does not mean causes on GoFundMe are not legitimate, although you should check the legitimacy of any online charitable requests. For example, it is legal to send $100 to help an amateur athlete attend the National Curling Championships. You can only deduct the $100 if the athlete created a 501(c)(3) organization for that purpose.

Of course, some legitimate 501(c)(3) organizations may be using GoFundMe as a fundraising outlet. In that case, your donations through the platform will be deductible. It is your responsibility to confirm the legitimacy of the organization.

If you are unsure about the status of any entity, ask for proof that it is a 501(c)(3) organization. You should also look up the organization on GuideStar. Keep in mind that not every nonprofit organization is a 501(c)(3) entity and allowed to accept deductible donations.

What if you have set up a GoFundMe account to raise money for a cause and are not an official nonprofit organization? Are you responsible for income tax on what you received? It is possible all donations you received are simply gifts and tax-free income. However, this is not always the case and it can get complicated. Be sure to consult a tax professional for further details.

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