Q&A of the Week September 14, 2022

Question

Do you have to pay taxes on donations received through crowdfunding?

Answer

Crowdfunding is raising money through websites that solicit contributions from many people for businesses, charitable donations, or gifts. Crowdfunding can be organized on behalf of other people or businesses, or people can use crowdfunding to benefit themselves and/or their own business.

GoFundMe is an example of a popular crowdfunding platform.

Generally, if the contributors do not receive or expect to receive anything in return, the donations are considered gifts, which do not have to be included in the recipient's gross income and are not taxable.

It is always important to keep complete and accurate records. In addition, taxpayers may want to consult a tax professional to discuss how to treat funds received via crowdsourcing.

For more information: https://www.irs.gov/newsroom/money-received-through-crowdfunding-may-be-taxable-taxpayers-should-understand-their-obligations-and-the-benefits-of-good-recordkeeping