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Valor Tax Relief Team
Professional Tax Resolution Specialists
Introduction
Key Takeaways
- Personal GoFundMe donations for medical expenses, education, or emergency relief are typically considered non-taxable gifts by the IRS.
- Donations become taxable income if donors receive something of value in return, if an employer sets up the fund, or if funds are raised for business purposes.
- Personal GoFundMe donations are generally not tax-deductible for donors unless made to verified 501(c)(3) charitable organizations.
- Donors who give more than $19,000 per recipient in 2025 may need to file a federal gift tax return, though few actually owe gift taxes due to lifetime exemptions.
- GoFundMe may issue Form 1099-K to campaign organizers if total payments exceed $5,000 in 2025, which requires proper tax classification of funds.
- Both donors and recipients should maintain detailed records of donations and receipts to ensure compliance with IRS regulations and support proper tax reporting.
Crowdfunding has transformed how individuals and organizations raise money for various causes, from medical expenses and emergency relief to community projects and personal aspirations. GoFundMe has emerged as one of the most popular platforms for collecting donations from friends, family members, and even strangers who want to support a cause. However, many users of crowdfunding platforms often wonder about the tax implications of these donations.
Do you have to pay taxes on GoFundMe donations? Are GoFundMe donations tax-deductible? This comprehensive guide explores these critical questions, offering detailed insights into the relationship between GoFundMe donations and federal tax obligations. Understanding these tax rules helps both donors and recipients navigate their responsibilities and avoid unexpected tax consequences.
How GoFundMe Works
Crowdfunding platforms like GoFundMe provide a streamlined way for individuals to solicit financial contributions from friends, family members, and even strangers who want to support their cause. The process begins when you create a campaign page that includes a title and description explaining your fundraising goal. You'll also set a target amount you hope to raise.
Once your campaign page is established, you can share it through social media, email, and other communication channels using effective fundraising strategies. Visitors to your campaign page can make donations directly through the GoFundMe platform using secure payment methods. The platform facilitates transactions through credit or debit cards, and sometimes third-party payment applications like PayPal. After donations start coming in, you can withdraw the funds from your campaign, minus any fees that the platform charges.
Are GoFundMe Donations Taxable?
The primary question most people want answered is whether donations received through GoFundMe are subject to taxation. Generally, donations made for personal causes like medical expenses or educational costs are considered non-taxable gifts by the IRS. However, if donors receive something of value in return for their contribution, the transaction may be classified as a sale rather than a gift, making it taxable income. These exceptions are crucial to understand when determining your tax obligations. GoFundMe itself does not report funds raised to the IRS or withhold taxes from donations.
When Donations Become Taxable Income
While personal GoFundMe donations are typically non-taxable, several specific scenarios can cause the IRS to classify these funds as taxable income:
Donations in Exchange for Goods or Services
If you offer something of value in exchange for a donation, the IRS may view this transaction as a sale rather than a gift. Since profits from sales are taxed as income, the "donation" would be considered taxable.
For example, if you promise donors a product, service, or other benefit in return for their contribution, those funds must be reported as taxable income on your tax return.
Employer-Organized Campaigns
When an employer sets up a GoFundMe campaign for an employee, the funds are typically considered additional income and are subject to taxation accordingly.
This classification applies because the employer-employee relationship creates a different tax context than personal gifts from friends or family members.
Funds Not Given to Intended Recipient
If someone organizes a GoFundMe campaign on behalf of another person but does not transfer the funds to that individual, the money would be considered taxable income to the organizer and added to their gross income.
This situation can create significant tax complications, so it's essential to ensure funds are properly transferred to the intended beneficiary.
Business Ventures and Profit-Generating Activities
If you use GoFundMe to raise money for a business venture or profit-generating activity, the funds received are generally treated as taxable income by the IRS.
For instance, funds raised for a business startup may be considered income or capital contributions and subject to income tax. Because tax rules can be complex in these cases, consulting a tax professional is strongly recommended.
Are GoFundMe Donations Tax-Deductible?
If you're making donations rather than receiving them, you may wonder whether your contributions are tax-deductible. Donations to personal GoFundMe campaigns are generally considered personal gifts by the IRS and are not tax-deductible. If you're donating to a friend, family member, or a campaign supporting an individual's personal needs, you cannot claim a tax deduction for your contribution.
However, donations made to GoFundMe campaigns that benefit registered nonprofit or 501(c)(3) charity organizations are typically tax-deductible. Before donating, it's crucial to verify the recipient organization's tax-exempt status under IRS rules. GoFundMe provides options to donate directly to verified charities, making it easier to support tax-exempt organizations. Before donating, it's important to verify the recipient's tax-exempt status and keep detailed records to claim any eligible tax deductions.
Gift Taxes and Record-Keeping
Understanding Gift Taxes on GoFundMe Donations
There are federal gift tax rules for donors who give large sums through GoFundMe. Gifts can include money, property, art, vehicles, and more. The federal gift tax applies to gifts exceeding an annual exclusion amount, which is $19,000 per recipient in 2025. Donors who exceed this threshold must file IRS Form 709, a federal gift tax return. However, few actually owe gift taxes because the lifetime exemption amount—$13.99 million in 2025—usually covers most gifts. Gifts can include money, property, or other valuables, and amounts below the annual limit do not need to be reported. If you finally exhaust the lifetime limit, you'll be subject to a gift tax rate from 18% to 40%, depending on how much you gifted. Keep in mind that actual tax payments occur only after surpassing the lifetime exemption.
Record-Keeping for GoFundMe Donors and Recipients
Both individuals organizing GoFundMe campaigns and donors should maintain detailed records of donations and receipts to ensure compliance with tax regulations, and campaign organizers are advised to consult with a tax professional. Donors contributing to qualified 501(c)(3) charities through GoFundMe may be eligible for tax deductions but must retain proper documentation, including GoFundMe receipts and proof of payment like bank or credit card statements. For donations of $250 or more, the IRS requires written acknowledgment from the charitable organization, which may not always be automatically provided by GoFundMe.
For recipients, record-keeping is essential in determining whether funds raised are considered gifts or taxable income. If the campaign is for personal use, such as covering medical expenses or disaster relief, the funds are generally considered gifts and are not taxable to the recipient. However, if the funds are given in exchange for services, goods, or business support, they may be treated as taxable income.
1099-K Forms for GoFundMe Campaign Organizers
Additionally, GoFundMe may issue IRS Form 1099-K to campaign organizers if total payments received exceed the 1099-K threshold in a calendar year, or if the threshold set by the recipient's state is met. In 2025, this threshold is $5,000 over any number of transactions. While receiving a 1099-K does not automatically mean the funds are taxable, it signals that the IRS has been notified of the payments, and proper classification of the funds is critical.
Given the complexities of tax laws surrounding crowdfunding, consulting with a tax professional is strongly recommended. A tax advisor can help donors determine deductibility, assist recipients in properly reporting funds, and provide guidance on potential state tax implications.
Getting Tax Help for GoFundMe Users
The important thing to keep in mind here is that there are responsibilities on both sides of the aisle, whether you are the organizer of a crowdfunding campaign or a donor. If you are the organizer, always make sure to use the platform responsibly and transparently. If you are a donor, stay below the annual gift tax limit as often as possible. When you can't, or when you finally exhaust the lifetime limit, make all the necessary tax filings and payments.
Keeping accurate records, verifying the tax-exempt status of charitable organizations, and consulting with a tax professional are key steps in ensuring that both donors and recipients stay compliant with IRS regulations. Additionally, implementing financial protection and cybersecurity strategies can further safeguard your crowdfunding activities.
Conclusion
Understanding the tax implications of GoFundMe donations is essential for both campaign organizers and donors. While personal donations for medical expenses, education, or emergency relief are typically non-taxable gifts, specific circumstances can trigger tax obligations. Donors should be aware of gift tax rules and tax-deductibility requirements, while recipients must properly classify funds and maintain accurate records. Given the complexities of tax laws surrounding crowdfunding, consulting with a qualified tax professional is strongly recommended to ensure compliance and avoid unexpected tax consequences.
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