Gofundme Fees and Taxes: A Guide for Donors and Recipients

Gofundme fees can range from 2.9% to 5% of the total amount raised, plus a payment processing fee of $0.30 per donation.

Donors should be aware that these fees are deducted from the total amount raised, so if a campaign raises $100, the actual amount received by the recipient might be $92.70.

Gofundme also charges a payment processing fee of $0.30 per donation, which can add up quickly.

If you're planning to donate to a GoFundMe campaign, it's essential to understand how these fees work to ensure your donation has the maximum impact.

GoFundMe charges a transaction fee of 2.9% + $0.30 per donation.

This fee is automatically deducted from each donation, and it's what helps GoFundMe provide more ways to donate, including through credit, debit, PayPal, Apple Pay, or Google Pay.

The funds you raise through GoFundMe are sent directly to you, and there are no restrictions or deadlines on the money you receive.

You never have to worry about paying a bill because of this transaction fee, which is deducted automatically from each donation.

For organizers in the US, there's no fee to start or manage a fundraiser, but there is one small transaction fee per donation.

Donors can also choose to tip GoFundMe, but it's never required.

GoFundMe charges a recurring donation fee of 5% per donation if donors choose to make their donation recurring.

Here's an interesting read: Currency Conversion Fee vs Foreign Transaction Fee

Donors who receive something of value in return for their contribution may be considered to be making a sale, which could be taxable as personal income.

The IRS considers employer donations to crowdfunding campaigns set up to benefit employees to be taxable income for the recipient.

If you're raising money for a business venture, it's a good idea to work with a tax professional to ensure you're following the correct tax laws.

Donors who contribute over $18,000 ($36,000 if filing jointly) to a crowdfunding campaign not run by a qualifying charity may need to file a federal gift tax return.

Additional reading: Income Tax Deadlines

Crowdfunding platforms will send you a 1099-K form the following year if your campaign raised more than a certain amount of money and contributors received something in return for their donation.

You should keep good records and receipts, including a paper trail of the campaign and how the funds were dispersed, for at least three years.

Donations received through GoFundMe are typically considered nontaxable gifts in the IRS's eyes, but there are exceptions that can cause the IRS to consider your crowdfunded money taxable income.

If you offer something of value in exchange for a donation, the IRS may view it as a sale and tax the profits as income.

HMRC might consider donations to be a business's income and therefore tax-deductible, but this depends on the type of crowdfunding campaign.

Here's a breakdown of the tax treatment of different types of crowdfunding:

Donors to crowdfunding campaigns may not be able to deduct their contributions during tax time, unless the campaign is set up to benefit a registered 501(c)(3) organization.

It's essential for both donors and recipients to keep detailed records of their contributions and receipts, as the IRS may ask for documentation to verify the tax treatment of the funds.

Keeping accurate records of your GoFundMe donations and tax documents is crucial to ensure you're compliant with IRS regulations. This includes keeping receipts for your contributions, as GoFundMe provides these to donors.

As both donors and recipients, it's essential to maintain detailed records of contributions and receipts. The IRS may request documentation to verify whether funds raised are gifts or taxable income. For donors, this documentation can help claim a tax deduction if donating to a qualified charity.

Both GoFundMe and the IRS recommend keeping records for at least three years. This includes a paper trail of the campaign and how funds were dispersed. If you're unsure about a campaign's tax implications, consider consulting a tax professional for guidance.

Here's a summary of key tax documents you may need:

Donors should keep detailed records of their contributions to GoFundMe campaigns, as this documentation is necessary for claiming a tax deduction if the donation is to a qualified charity.

GoFundMe provides receipts to donors for their contributions, but it's still wise to consult with a tax advisor to ensure that any claims are handled properly.

Recipients of GoFundMe funds should also maintain accurate records of the funds they receive, especially if they're unsure about the tax treatment of their campaign.

Expand your knowledge: Taxation on Index Funds

If your crowdfunding campaign raised more than a certain amount of money and contributors received anything in return for their donation, the fundraising platform will probably send you a tax statement called a 1099-K form the following year that outlines exactly how much money you made. This form is sent to both you and the IRS, so don't worry about forgetting to report the income.

You should keep good records and receipts, as documentation can provide proof to the IRS about the taxability of your campaign and the money earned through it. The IRS recommends keeping a paper trail of the campaign and how the funds were dispersed for at least three years.

Worth a look: Irs Notice 2023-54 Inherited Ira

If you have questions about a campaign's tax implications, it's never a bad idea to call in a tax professional for a second opinion. They can help you navigate the complexities of crowdfunding tax documents.

Here are some key tax documents you may need to keep track of:

Donations to a GoFundMe campaign are typically not tax-deductible, as the IRS requires donations to be delivered to a qualified 501(c)3 tax-exempt organization to be eligible for a tax break.

However, if you donate to a crowdfunding campaign set up to benefit a business venture, things can get complicated, and it's a good idea to work with a tax professional to determine the taxability of your fundraiser.

In the UK, HMRC might consider donations to be a business's income and therefore tax-deductible, if the money raised from crowdfunding campaigns qualifies as donations with no expectation of return.

Donors should be aware that if they exceed the annual gift tax limit of $18,000 (or $36,000 if filing jointly), they may need to file a federal gift tax return, even if they don't owe gift taxes.

Expand your knowledge: What Is a Tax Return

Here are some key points to consider when it comes to tax deductibility and VAT:

It's essential to keep accurate records and verify the tax-exempt status of charitable organizations to ensure compliance with IRS regulations.