Many of us tend to live just within our means financially, and this means that we want to ensure that we spend our money well and that as little as possible gets wasted.
And for many people, this becomes especially important when it comes to charitable donations.
If someone pledges a certain amount of money to a charitable cause, whatever that may be, they usually want the whole amount that they donate to go directly to that cause.
This is why it’s important to know beforehand whether or not any donations you’d like to make to a good cause are tax-deductible. If it is tax-deductible, then this may affect the amount you wish to donate.
You may either wish to donate a larger amount, so that a set, predetermined amount of money goes toward the cause.
Or, if you don’t have a lot of money that you could donate, this could put you off donating any money at all, which would be a shame.
The focus of this article is whether or not any donations made on the GoFundMe website are tax-deductible, and the implications of this and what it means to you and to the cause.
Please feel free to scroll ahead to any section that jumps out at you. Here goes…
Let’s kick things off with a few basics…
What Is GoFundMe?
GoFundMe is an online database through which anybody can raise money for causes of their own choosing.
Fundraisers can set up their very own web pages on the site, through which anyone can make a donation.
Fundraisers can arrange to raise money for absolutely any cause they can think of, big or small. What’s more, GoFundMe does not charge a fee to start a fundraiser.
Starting a GoFundMe page is easy and intuitive, and you can aim for a goal as high or as low as you please.
Those who like to donate to good causes can either browse the website for any causes that catch their attention, or they can access the page of a particular cause via a link.
Fundraisers typically raise awareness of their GoFundMe page by multiple means.
This may include word of mouth and/or email, but these days it is more usually marketed by social media platforms, such as Facebook, Instagram, Twitter, and more.
Are GoFundMe Donations Tax Deductible?
As a general rule, across the USA you can deduct certain charitable donations from your taxes, thus reducing the amount of money you owe the federal government.
When you are calculating your income tax due, the IRS allows you to deduct charitable contributions up to 50% of your adjusted gross income, thus reducing your annual tax burden.
And now the crux of the matter, are GoFundMe donations tax-deductible?
And the answer is that it depends on the specific cause. Some are and some aren’t – different types of charitable donations have their own set of tax rules, as laid out in the following lists.
Types Of Charitable Contributions That Are Tax Deductible
- Donations to local, state, and federal governments
- Donations to nonprofit schools and hospitals
- Payroll deductions through your employer to charity
- Donations to religious groups
- Donations to war veterans’ organizations
- Volunteer expenses
Types Of Charitable Contributions That Are NOT Tax Deductible
- Donations to political parties or action committees
- Donations to foreign organizations (including governments)
- Donations to for-profit schools or hospitals
- Donations to homeowners’ associations
- Donations to labor unions
- Donations to social and sports clubs
If the causes you are interested in don’t appear to fall within either of these lists, don’t worry – the IRS has a very comprehensive guide to the deducting of tax for charitable contributions, which you can access on this link.
How About Personal GoFundMe Pages?
A great many of the fundraising attempts that you see on the GoFundMe website are personal GoFundMe pages.
And there are two questions here. Is the money received via these pages tax-deductible? And are these donations tax-deductible for donors?
Well, it turns out that any donations received by an individual via a personal GoFundMe page are legally considered to be “personal gifts” and as such this means that they are NOT taxed as income here in the US.
However, sadly for the donors to these personal GoFundMe pages, their donations there are NOT in fact tax-deductible.
How Is GoFundMe Funded? Does A Full Donation Go Directly To Each Cause?
On a side note, since there is no fee for setting up a GoFundMe page, as mentioned earlier, you may be wondering how the GoFundMe website can afford to keep running…
It turns out that GoFundMe deducts a small transaction fee for each donation. This comes to 2.9% plus 30 cents of each transaction. This covers the cost of payment processing.
It’s also worth noting at this point that there is a minimum donation amount of $5 per donation.
So long as each donation meets the minimum amount, donors can give any amount of money they want to the cause in question.
So, the online GoFundMe database is an excellent way to raise money for a worthy cause. But how a GoFundMe page affects your income tax very much depends on who is using it and how…
For example, donations to social and sports clubs and action committees and the like are not tax-deductible.
But on the other hand, donations to nonprofit schools and hospitals, to religious groups, and to war veterans’ organizations are tax-deductible.
However, if you are in receipt of donations for a personal GoFundMe page, this is considered to be a personal gift, and as such, this is not classed as taxable income in the US.
We mentioned this earlier, but it bears repeating here, for a comprehensive guide to the deducting of tax for charitable contributions, directly from the IRS themselves, check out this link.
While GoFundMe features a minimum donation, and charges a transaction fee for each donation, this is minimal, and should not put you off from donating to worthy causes.