Hello - my 19yr step-son has brain cancer and we have been raising money to help with mostly medical and some living expenses since he is not working. He is on my insurance but there will be a lot of co-pays. Right now we have raised over $3,000 and think we will get up to $5,000. My wife and my step son's father opened up a checking account to put the funds in. My step-son has filed his own taxes last year and he only makes like $10,000 a year working a subway. We live in CT. My question is how is this money handled tax wise? ======>You can take your stated position that these are non-taxable gifts, since the donors were under no obligation to give this money and they should have been made aware that this was not a deductible charitable contribution, since it was for the benefit of a specific individual.
You can report this one of 2 ways if you received a 1099K(SOME DONEES RECEIVE 1099Ks AS T EHYrun a fundraising drive for beneficiaries online)if yu received a 1099K
You may print and mail your return and attach a statement explaining that you received a 1099-K for gross proceeds and that the funds were gifts for medical care.
Or you may enter the 1099-K as "miscellaneous other income", on your 1040 line 21 and then make a second entry with a brief explanation and an entry for an offsetting negative amount. This way the 1099-K amount is reported on your return but you've explained that it is not taxable
How will report the taxes and how? Do we need to keep records as to how much money and where it goes - meaning what kind of record keeping do we need for how the money was used?...does the IRS require something=====>as mentioned above; 1a copy of bank account or canceled checks or etc.funding is a very interesting topic- the critical issue is whether the money received is or is not considered income. It is becoming an issue because taxpayers are receiving Forms 1099-K for merchant card and third party network payments ? if they do not report the income the IRS will question the return;Some good news might be if you can come to an agreement and convince the IRS to classify the money received as a gift. If there was no perk given to contributors then some argue the money donated to you was not taxable.You can take your stated position that these are non-taxable gifts, since the donors were under no obligation to give this money and as said, they should have been made aware that this was not a deductible charitable contribution, since it was for the benefit of a specific individual.