I’m making plans for a fundraising campaign for a friend with serious medical issues. This turns out to be rather complicated if I don’t want to get hit with income tax on money that I’m not keeping. I’m not ready yet to reveal specifics; this post is about exploring this issues. If anyone knows more, please let me know.
Fundraising and gifts for an individual are not tax-deductible. If I collect the money and pass it through, the income is the recipient’s, not mine, but if I don’t carefully document that, the IRS could get nasty.
The plan is a crowdfunding campaign, and the key question is what account or accounts the money will go into. I’ve found an article on the Massachusetts Attorney General’s site which looks useful. It appears that opening a special bank account jointly with the recipient is the safest way to go. Commingling money with my personal funds can look bad, so I shouldn’t use my PayPal account; the recipient may have one, or we may have to go with credit cards only. There will be expenses, so I’ll need to have access to the money myself.
If you have suggestions, let me know. I already understand that comments don’t count as legal advice.