Get Quartz in your inbox

Free daily briefing on global business news.

Are GoFundMe donations tax-deductible? Most are not, but charity campaigns can be

Most GoFundMe donations are not tax-deductible, though charity campaigns can be. This guide explains how IRS rules on gifts, gift tax and income apply to donors and recipients

A donation to a neighbor's GoFundMe page can feel like charity, but the federal tax code does not see it that way. The IRS separates two kinds of giving. Money given to a qualified organization, such as a registered 501(c)(3) charity, can count as a charitable contribution. Money given to a named person counts as a personal gift. That line shapes the tax picture for everyone involved in a crowdfunding campaign.

Are GoFundMe donations tax-deductible? For most campaigns, the answer is no. The typical fundraiser on the platform is a personal appeal for an individual or a family. It might cover rent after a job loss, funeral costs or repairs after a house fire. Those gifts go to people, not to tax-exempt organizations. IRS rules do not allow a deduction for contributions to individuals. GoFundMe offers a separate campaign type for registered charities, and the company says donations to those campaigns are tax-deductible.

The answer also depends on which side of the campaign a reader is on. Donors want to know whether a gift will lower their tax bill, what records they need and whether a large gift triggers any filing. Recipients face different questions. They want to know whether the money counts as income, whether they have to report it and what a tax form from a payment platform means.

The IRS says the tax treatment of crowdfunding proceeds depends on the facts. A fundraiser for a family hit by a medical emergency is not treated the same way as one that raises money for a business or pays someone for work. The way a campaign is set up, who receives the money and why the money was given all shape the result.

The 10 slides that follow walk through the rules. They cover the difference between personal and charity campaigns and how to confirm that an organization can receive deductible gifts. They also explain why itemizing matters for any deduction, the record-keeping rules for larger charitable gifts and how the federal gift tax applies to large donors. The final slides cover when crowdfunding money becomes taxable income, what a Form 1099-K signals and what medical fundraisers mean for both sides. Anyone with an unusual situation, such as a campaign tied to a business, should confirm the details with a tax professional.

Why personal GoFundMe donations are not tax-deductible

Money given to a personal GoFundMe campaign is not tax-deductible. The IRS treats a contribution to a named individual or family as a personal gift, not a charitable contribution. A donor cannot claim it as a deduction on a federal return.

Most campaigns on GoFundMe fall into this personal category. They are set up to help a specific person or household with costs such as tuition, car repairs, travel or time away from work. The organizer may be a friend, a relative or the beneficiary. In each case, the money is meant for people rather than for an organization.

That distinction drives the tax result. IRS Publication 526, the agency's guide to charitable contributions, lists contributions to individuals among the gifts a taxpayer cannot deduct. The publication applies this rule even when the person receiving the money is needy or facing hardship.

The word "donation" on a fundraising page does not change the analysis. A personal fundraiser can use the same wording as a charity appeal. The tax question turns on who ultimately receives the money, not on what the platform or the organizer calls the payment.

A donor's intentions do not change it either. Someone might give $50 to help a coworker replace belongings lost in a flood. For tax purposes, that gift is treated the same as handing the coworker cash or writing a personal check.

The confirmation email a donor receives after giving to a personal campaign documents the payment. It can serve as a personal record. It does not turn the gift into a deductible charitable contribution.

A donor can usually tell which type of campaign it is from the page itself. A personal fundraiser names an individual, a family or a group of people as the beneficiary. GoFundMe sets up campaigns that benefit a registered charity as a separate type. Those follow different tax rules.

Donors who want a tax deduction for their giving need the recipient to be a qualified tax-exempt organization. Donors who want to help someone they know can still give through a personal campaign. That money comes out of after-tax income, with no break on the donor's federal return.

When a GoFundMe charity donation is tax-deductible

A GoFundMe donation can be tax-deductible when the campaign benefits a qualified tax-exempt organization, such as a registered 501(c)(3) charity, rather than a person. The legal status of the organization receiving the money decides whether the gift qualifies. The platform used to collect it does not.

GoFundMe runs a separate campaign type for this purpose. Its charity fundraisers raise money for a nonprofit instead of an individual or a family. GoFundMe states that donations to these charity campaigns are tax-deductible. The company also says donors receive receipts for those gifts.

The term 501(c)(3) refers to a section of the Internal Revenue Code. It covers groups organized for charitable, religious, educational, scientific and certain other purposes. Food banks, animal shelters, nonprofit hospitals and private nonprofit universities are typical examples of organizations with that status.

IRS Publication 526 lists other qualified organizations as well. Churches, temples, synagogues and mosques can qualify. So can federal, state and local governments, but only when a gift is made solely for public purposes. Certain war veterans' organizations and nonprofit volunteer fire companies also appear on the list.

Tax-exempt status alone does not make a gift deductible.........

© Quartz