Helping Someone in Need

Today TaxMama® hears from MJ in the TaxQuips Forum who tells us, “We have a friend whose child has been injured, and would like to raise funds for her to help pay for the bills. We cannot afford to file for a non-profit (KY); and don’t know if that’s even necessary for a case like this. My fear is that we’ll receive donations for her. Then she’ll get hit at tax time owing money on the donations. Where can I find info on this, or can you offer any help?” 

Ask TaxMama 

Hi MJ, 

As it happens, I do know how this can work. I did some research on this problem several years ago. Here’s the easiest way to do this. 

If the people who are donating and helping are not looking for a tax deduction, you don’t need to have a non-profit organization. Just make it very clear to them, in writing that there is no donation deduction.  In fact, what you can do is create a little form that tells them that this a GIFT, not a charitable donation. Have them enter the amount of the gift.  

Your friends, who get this money, will be getting GIFTS. If they have proof of each gift, in writing, they won’t have a tax problem. Gifts are not taxable to the person receiving them.

People are giving them the money with no expectation of a service or product in return. As long as no individual gives the child or family member a gift of more than $13,000, which is highly unlikely, the kind people who help won’t need to file gift tax returns, either. 

How’s that for making it easy?

And remember, you can find answers to all kinds of questions about charities, gifting and helping out – and other tax issues, free. Where? Where else? At

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