Question: A childhood friend of my daughter lost her husband in a freak accident. The deceased was the father of three children (my daughter’s friend is the mom) and donations are being collected to help the family. I was going to put cash in a card, or write a check, but my daughter said they have a GoFundMe, which she explained is an online fundraiser that accepts electronic payments. Does GoFundMe keep any portion of the donations? Are donations reported as income on which the recipient must pay tax? Are they tax deductible for the donor?
Answer: GoFundMe.com is a popular crowdfunding platform on which people can seek monetary donations for themselves or others. Yes, GoFundMe automatically deducts a transaction fee of 2.9% plus 30 cents from each donation, according to its website. For example, $3.20 would be deducted from $100 given by one donor, and $16 would be deducted from $500 given by five donors. The recipient would get $96.80 and $484, respectively.
Donations to crowdfunding campaigns given with no strings attached generally are considered gifts — not gross income — and therefore aren’t subject to federal income tax, according to the Internal Revenue Service. However, donations that are not the result of “detached and disinterested generosity” may not qualify as gifts, the IRS says on its website. “Additionally, contributions to crowdfunding campaigns by an employer to, or for the benefit of, an employee are generally includible in the employee’s gross income,” it says.
Crowdfunding organizers and anyone receiving money from a such a campaign should keep records of all fundraising and disposition of the money for at least three years, the IRS says. It also suggests that taxpayers who receive such donations consult a tax professional for specific advice.
A person can give $16,000 annually per recipient before the federal gift tax kicks in — for the donor, not the recipient.
Lastly, no, a GoFundMe donation is not tax deductible when it’s given to a personal crowdfunding campaign like the one you described; the same would be true if you offered cash or a check directly to the widow. Donations given through GoFundMe to registered tax-exempt charities or nonprofit organizations are tax deductible, as they would be if you donated to the tax-exempt group directly.
Q: Did the IRS ever finish the automatic adjustments for people who overpaid income taxes on unemployment benefits they received in 2020? I never got anything back, and when I called last year they said not to file an amended return.
A: No, the federal agency says it is still processing corrections on tax year 2020 returns for taxpayers who had already filed their taxes by the time a portion of unemployment compensation received that year was excluded from federal income tax. It updated its guidance on this subject in March, listing circumstances when filing an amended return is warranted. Read more at 808ne.ws/FAQs.
McCully-Moiliili library
The McCully-Moiliili Public Library is scheduled to reopen Friday, more than two years after it closed for major repairs.
After it reopens, the library at 2211 S. King St. will be open to the public from 9 a.m. to 4 p.m. Tuesday, Wednesday and Saturday, plus from noon to 7 p.m. Thursday and from 11 a.m. to 4 p.m. Friday, the Hawaii State Public Library System said in a news release.
The library, which closed in March 2020, has a new roof with a solar power system and improvements throughout the building’s interior, including to repair water damage. But it still needs work outside, including exterior painting, parking lot repaving, landscaping and security enhancements such as cameras, lighting and fencing, the news release said.
Write to Kokua Line at Honolulu Star-Advertiser, 500 Ala Moana Blvd., Suite 7-500, Honolulu, HI 96813; call 808-529-4773; or email kokualine@staradvertiser.com.
