Accountants- question on fund raising (1 Viewer)

efil4stnias

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my best friend of 38 years lost his home. Him and his family are staying with us for the foreseeable future.

While he was insured for the building, he was not for content. Lost everything basically.

While i know he would never do on own, i am planning on raising some funds for his family to start to put their life back together.

My question is since he nor I are a "non-profit" , would money raised and donated to him be considered income? I dont want to put any additional monetary burden on them if i dont have to.

i just dont know how that works.

thanks.
 

superchuck500

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my best friend of 38 years lost his home. Him and his family are staying with us for the foreseeable future.

While he was insured for the building, he was not for content. Lost everything basically.

While i know he would never do on own, i am planning on raising some funds for his family to start to put their life back together.

My question is since he nor I are a "non-profit" , would money raised and donated to him be considered income? I dont want to put any additional monetary burden on them if i dont have to.

i just dont know how that works.

thanks.

I'm not an accountant but I do have a basic understanding of tax law. I believe that those kinds of donations are considered gifts as far as the recipient is concerned. Because the recipient is not a qualified charity, the donor cannot claim a deduction. But for those on the receiving end, gifts are not income and there is no tax to the recipient.
 
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efil4stnias

efil4stnias

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I'm not an accountant but I do have a basic understanding of tax law. I believe that those kinds of donations are considered gifts as far as the recipient is concerned. Because the recipient is not a qualified charity, the donor cannot claim a deduction. But for those on the receiving end, gifts are not income and there is no tax to the recipient.
ok got it. so whomever donates, unfortunately they cannot claim as donation on their taxes, but my buddy wont have to pay any sort of tax on the money "gifted"

Thank you superchuck.
 

rodgepodge9

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I also am not an accountant, but work in finance. What superchuck said is accurate and while I can't offer any expertise, I can offer another question to look into. The annual gift exemption is 14k currently. You'd want to make sure how these gifts would be reported if your efforts exceed that amount. Here is the IRS FAQ on gifts https://www.irs.gov/businesses/smal...oyed/frequently-asked-questions-on-gift-taxes
 

superchuck500

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I also am not an accountant, but work in finance. What superchuck said is accurate and while I can't offer any expertise, I can offer another question to look into. The annual gift exemption is 14k currently. You'd want to make sure how these gifts would be reported if your efforts exceed that amount. Here is the IRS FAQ on gifts https://www.irs.gov/businesses/smal...oyed/frequently-asked-questions-on-gift-taxes

I think what you're saying is that OP needs to make sure that he isn't seen as the original recipient of funds so that when he makes the transfer to his friend, he could owe gift tax if the amount is more than $14k?

It's a good point. But I think if you keep a clear accounting and have the funds indicated (either in a check memo or by some online fund-raising) that they are for the recipient (and not the fund-raiser as OP suggests he would be doing) I think it's fine.
 
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efil4stnias

efil4stnias

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I also am not an accountant, but work in finance. What superchuck said is accurate and while I can't offer any expertise, I can offer another question to look into. The annual gift exemption is 14k currently. You'd want to make sure how these gifts would be reported if your efforts exceed that amount. Here is the IRS FAQ on gifts https://www.irs.gov/businesses/smal...oyed/frequently-asked-questions-on-gift-taxes
I think what you're saying is that OP needs to make sure that he isn't seen as the original recipient of funds so that when he makes the transfer to his friend, he could owe gift tax if the amount is more than $14k?

It's a good point. But I think if you keep a clear accounting and have the funds indicated (either in a check memo or by some online fund-raising) that they are for the recipient (and not the fund-raiser as OP suggests he would be doing) I think it's fine.

ok good point. So the donations would have to be made out to him personally versus me ?

and i am not looking to raise that much. im thinking more like $2500-5000.
 

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