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Understanding GoFundMe and Tax Reporting Basics

GoFundMe is a crowdfunding platform where people create campaigns to raise money for personal causes, medical expenses, education, disasters, and other needs. Since its founding in 2010, the platform has facilitated billions of dollars in fundraising. When money moves through GoFundMe, tax questions naturally arise because the Internal Revenue Service (IRS) treats different types of fundraising differently under tax law.

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The first thing to understand is that not all money received through GoFundMe is taxable income. The IRS distinguishes between gifts, loans, and income. A gift—money given without expecting anything in return—is generally not taxable to the person receiving it. However, if someone contributes money expecting something of value in return, or if the funds are for a business or service, the tax treatment changes. This distinction matters because it affects whether you need to report the money on your tax return.

Many people assume that all fundraising is tax-free, but that assumption can create serious problems later. The IRS has specific rules about when contributions count as taxable income, and GoFundMe itself reports certain campaigns to the IRS. Understanding these rules before you start a campaign—or after you've received funds—prevents confusion and potential tax problems.

GoFundMe campaigns fall into several categories: personal causes (medical bills, family emergencies, funeral costs), charitable fundraising, business ventures, and creative projects. Each category has different tax implications. For example, money raised for personal medical expenses may be treated as a gift, while money raised to fund a small business venture might be considered business income.

Practical takeaway: Before starting or contributing to a GoFundMe campaign, consider what the money is for and whether contributors expect something in return. This basic question determines how the IRS will view the transaction.

How GoFundMe Reports Money to the IRS

GoFundMe follows IRS regulations regarding reporting requirements. If a campaign raises money that meets certain thresholds, the platform may issue tax forms to both the fundraiser and the IRS. Specifically, GoFundMe issues Form 1099-K for payment card transactions and certain other transactions when they exceed $20,000 and involve more than 200 transactions in a calendar year. However, state requirements vary, and some states have lower thresholds.

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When GoFundMe issues a Form 1099-K, it gets reported to the IRS automatically. This means the IRS receives information about the campaign, and the fundraiser should expect that the income may be on the IRS's radar. The form reports the gross amount raised, not the net amount after GoFundMe's fees. This is important because it means even if GoFundMe takes a percentage, the full amount appears on the tax form.

Not all campaigns trigger 1099-K reporting. Campaigns that raise less money, involve fewer transactions, or are structured differently may not generate a 1099-K. Additionally, GoFundMe distinguishes between personal fundraisers and charitable fundraisers. Donations to registered charitable organizations typically follow different reporting rules than personal campaigns.

If a Form 1099-K is issued, the fundraiser receives a copy and should receive notification. The form shows the gross amount of funds received. If the person receives a 1099-K but believes the money should not be taxable—for instance, because it was a gift—they need to report this discrepancy on their tax return and explain why the reported amount is not taxable income.

GoFundMe also reports information through other means. If a campaign is set up as a charitable fundraiser for a registered nonprofit, the platform may handle reporting differently. Personal campaigns go directly to the fundraiser, while charitable campaigns may go through the nonprofit organization.

Practical takeaway: Keep records of your GoFundMe campaign, including the campaign description, who contributed, and for what purpose. If you receive a 1099-K, compare it to your records. If the reported amount differs from what you actually received, or if you believe the funds should not be taxable, document your reasoning before filing your tax return.

Tax Treatment of Different Campaign Types

The type of GoFundMe campaign you create significantly affects its tax treatment. Understanding these differences helps you prepare for tax filing and report income correctly.

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Personal and Family Fundraisers: Money raised for personal medical expenses, funeral costs, rent assistance, or other personal hardships may be treated as gifts. Gifts are generally not taxable income to the recipient. However, this assumes the contributors are truly giving money as gifts without expecting anything in return. If a campaign clearly states that contributors will receive a product, service, or benefit, the money becomes harder to classify as a gift.

Medical Fundraisers: Healthcare costs are one of the most common GoFundMe categories. Money raised to pay medical bills may be classified as gifts if people are donating out of generosity. However, if the campaign promises to use funds for specific medical services and those services are then provided, the IRS might view this differently. The key factor is whether contributors expect something back.

Charitable Fundraisers: If you create a GoFundMe campaign designated as supporting a registered charitable organization (a nonprofit with 501(c)(3) status), the tax treatment differs. These contributions may be tax-deductible for donors, and reporting goes through the nonprofit. The nonprofit itself handles tax reporting to the IRS. Individuals raising money for charities should coordinate with the organization.

Business and Creative Fundraisers: Campaigns that raise funds to start a business, create a product, or fund a creative project face different tax rules. These funds are typically treated as business income or as capital for a business venture. If someone raises $50,000 to start a restaurant through GoFundMe, that $50,000 is generally taxable business income. The person must report it, and it may be subject to self-employment tax as well.

Fundraisers with Rewards or Benefits: Some campaigns promise rewards to contributors—for example, "Donate $25 and receive a signed copy of my book" or "Donate $100 and get two tickets to the event." When contributors receive something of value in return, the contributions are considered income, not gifts. The IRS views these as sales transactions.

Practical takeaway: Write your campaign description carefully. If you want funds to be treated as gifts, the campaign should clearly indicate that contributions are voluntary gifts without any expectation of return. If your campaign promises rewards or benefits, be prepared to report the funds as income and understand the tax consequences.

Deductions, Expenses, and What You Can Write Off

If your GoFundMe funds are treated as income, you may be able to deduct legitimate business expenses, reducing your taxable income. The rules for deductions depend on whether you're running a business, pursuing a charitable cause, or receiving what should be treated as a gift.

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Business Expenses: If you raised funds for a business venture, you can deduct ordinary and necessary business expenses. These might include equipment, supplies, marketing, professional fees, rent, and utilities. The expense must be directly related to earning the income. For example, if you raised $50,000 to start a consulting business, you could deduct the cost of office software, website hosting, business cards, and other startup costs. Keep receipts and detailed records of every expense.

Cost of Goods Sold: If your campaign involves selling products or providing services, you can deduct the cost of goods sold. For instance, if you raised money for a bakery and use funds to purchase ingredients, those ingredient costs reduce your taxable income from the sales you make using those ingredients.

Medical Expenses: If funds were raised for medical bills and you use them for that purpose, you cannot deduct those medical expenses separately on your taxes. The funds themselves are not taxable income (because they're gifts), so there's nothing to deduct. However, if the funds are considered income for some reason, you might be able to deduct medical expenses under the medical expense deduction rules if they exceed a certain threshold.

GoFundMe Fees: GoFundMe charges a platform fee (typically 2.2% plus payment processing fees). You cannot deduct the GoFundMe platform fees as a business expense. However, if you're running a business and accept payments through other methods, similar payment processing fees (like credit card processing) may be de