When using Donately to collect donations for personal fundraisers, it’s important to understand the tax implications for both organizers and donors.
Here's what you need to know:
Tax Implications for Organizers
- Donations received through personal fundraisers are typically considered "personal gifts" in the United States.
- Personal gifts are generally not taxable as income.
- However, there may be specific situations where donations could be considered taxable income. For example:
- If funds are used in a way that qualifies as income.
- If the organizer fails to meet tax compliance requirements.
- To ensure compliance, maintain detailed records of all donations and consult a tax professional for personalized advice.
Tax Implications for Donors
- Donations made to personal fundraisers are not tax-deductible because they do not support a registered nonprofit organization.
- Donors should consult their own tax advisor for questions regarding their contributions.
Organizers’ Responsibility
As part of Donately's Terms of Use:
- You confirm that no goods or services are provided in exchange for donations.
- This distinction helps maintain the classification of funds as personal gifts.
Tax Documentation
- Donately does not issue tax forms (e.g., 1099 forms) or documentation for personal fundraisers.
- Funds raised are not reported as earned income unless required by specific circumstances.
Tips for Compliance
- Keep accurate records of all donations, including dates, amounts, and donor details.
- Consult with a tax professional to address any uncertainties or unique situations.
For additional information or specific tax questions, we recommend reaching out to a qualified tax advisor or visiting the IRS website.