We want to create a web site to raise funds for a person that was injured in a accident so that they don’t lose their home, etc. Just to keep the mortgage and utilities while they are in rehab for several months. Does anyone know what the tax implications are to the family that will be accepting those donations? Do we need to get a license for the State of Georgia? Any help will be appreciated!
Under Federal tax law, donated money should be a gift which is nontaxable to the recipient and not deductible for the donor. If any one donor gave more than $13,000 in a single year, the donor would be responsible for a federal gift tax. (A couple could each give $13,000 and could each give $13,000 to both the husband and wife so a total of $52,000 – though anyone giving that much would sure have a lawyer or accountant to help I’d think.) I don’t know what Georgia would think, but I’d guess they’d follow the federal rules.
There might be a way to set up a charity to make the gifts deductible.
Thank you Old Guy…didn’t want anyone to get in any trouble:eek:
Thank you Old Guy!
Gifts can even exceed the $13,000 limit if they’re for educational or medical purposes… but it doesn’t sound like a site of that sort would be getting amounts that large anyway.
Charities are pretty limited in cases like this. The donors are not supposed to be able to direct where the gift goes if they want to claim the charitable contribution deduction. If you can set up a fund for “victims of X” then you have a little more flexibility, but not just for an individual.
My only caution is to avoid any appearance of a profit-seeking motive for any person, whether a recipient or a coordinator. In particular, if someone takes a fee for managing the account, setting up the website, etc. that person will need to declare the fee as income.
If the donor(s) gave more than the above limits ($13,000 to $52,000) then a gift tax return would need to be filed, but it doesn’t mean gift tax would have to be paid. There is a lifetime exemption of over 5 million dollars. So your total gifts over the years need to exceed that amount before gift taxes need to be paid.