Ed. note: While the following tax advice is valid, we recommend that you consult a tax professional for personal advice should you need it. Also, we don’t suggest you actually use GoFundMe to rip people off because that’s wrong and makes you a twat.
One of the most frequent questions we get on the ole Facebook page is how to rat out a suspected GoFundMe fraudster to the IRS. It seems reasonable to think that Uncle Sam would want his cut of any personal profits, whether rightfully gained or not.
However, we spoke to our friend Tom Groth, Tax Lawyer and Partner at Glouzgal Ramos Groth LLP, who told us the following regarding GoFundMe tax treatment:
“As with anything having to do with the exchange of something of value, transfers of money via GoFundMe can result in different tax consequences. It really depends on the nature of the transaction itself.
Most GoFundMe donations are simply gifts, which are not tax deductible, and may require the person making the gift to file a gift tax return — but this is unlikely unless they are making a gift of more than $14,000.00 (individual) or $28,000.00 (married couple). Even if the gift is higher than those amounts, that only eats into the donor’s lifetime exclusion, which is currently over $5.4M, and will not trigger an actual tax obligation.”
In other words, tax obligations — if any — would lie with the donor, not with the donee (is that a word? Ah fuck it). I can see the lightbulbs going off over dim scammers’ heads as I type this, I know what y’all are thinking — time to fire up a GoFundMe and start raking in all that sweet, tax-free income! But wait…
“HOWEVER,” says Tom. “If you steal money and you don’t report that stolen money on your tax return, you’re a tax fraud too.” [see James v. United States, 366 U.S. 213]
So, the short answer here is just don’t start any scampaigns and you’ll be fine. But if you do plan on using crowdfunding sites to take money from people under false pretenses, you’d be wise to consult with a tax professional.