How to start a go fund me account
And, as the document states, information letters are not designed to address a specific set of facts but to provide general information. The IRS did issue Information Letter 2016- 0036 on June 24, 2016, although it pertains primarily to equity- or reward- based fundraising and constructive receipt of income. The IRS has issued little guidance in this area, leaving campaigners, taxpayers, and tax preparers concerned. In its first 15 days, this appeal raised more than $10.8 million. One of GoFundMe's largest campaigns to date was set up to aid victims of the October 2017 mass shooting in Las Vegas. Often, they are set up by friends and family members of the campaign beneficiary. People use these campaigns to raise money for personal or social causes, from contributing to the cost of building a school in Somalia to helping to send someone's child to summer camp. GoFundMe, which claimed more than 50 million donors and more than $5 billion in total fundraising as of late 2017, specializes in donation- based crowdfunding, "enabling people to raise money for personal causes and life events" ("About Us" and press release, Jan. In donation- based crowdfunding, backers typically receive nothing in return for their contribution. The two other main types of crowdfunding are reward- based crowdfunding, where backers, or contributors, receive a good or service in return for their payment, and equity- based crowdfunding, where backers receive equity in return for their payment. he pledge is essentially a donation" (lexicon.ft.com). Specifically, donation- based crowdfunding "involves backers donating varying sums of money to support a specific cause or project. GENERAL INFORMATION ABOUT CROWDFUNDINGĬrowdfunding is defined as "the activity or process of raising money from a large number of people, typically through a website, as for a project or small business" (). taxation of donation- based crowdfunding and not foreign- based campaigns. The scope of this article is limited to U.S. This article considers only donation- based crowdfunding, also known as personal crowdfunding or cause funding, discussing available guidance and how taxpayers and their tax advisers may plan for the income tax consequences of these campaigns (see also " Crowdfunding Brings New Opportunities for CPAs," JofA, Oct. One of the most common types is donation- based crowdfunding. Several types of crowdfunding exist, and the tax consequences of each can be different (see " Crowdfunding and Income Taxes," JofA, Oct.
However, these online campaigns raise a number of tax issues for people setting up a campaign and for beneficiaries. And while the majority of crowdfunding contributions were quite small - 62% of donors gave no more than $50 to any project - the amount raised can grow quickly. Most donors (68%) contributed to help someone in need. Crowdsourced online donation projects have become hugely popular: A 2016 report from the Pew Research Center found that 22% of American adults said they had contributed to a crowdsourced fundraising project.