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How does this work with taxes / income? If it's only temporary for a family that lost their home and ALL belongings to a fire, do i need to register with the irs as a non-profit? And what would be a good method of receiving donations online, maybe paypal? Any suggestions would be great, but please serious answers only.

2006-12-09 15:25:31 · 5 answers · asked by >>Ascher<< 3 in Business & Finance Taxes United States

This is not for my personal gain nor tax deductions. I think people are misunderstanding my point, i want to setup some sort of organization where people can donate to this family. What i have in the works so far: putting up a web page, broadcast it on the radio, "for benefit of" bank account setup. But i need to know if there is any legal matters i need to take up before i or this family starts accepting donations.

2006-12-09 15:52:23 · update #1

5 answers

Contrary to what the first responder said, a gift would not be tax-deductible and therefore wouldn't reduce the giver's taxable income for the year.

A non-profit organization can't be set up to benefit a particular individual or family, no matter how deserving. Such contributions aren't tax-deductible.

That said, many people will be likely to donate anyway toward helping this family through this very difficult time. Paypal would work for online, but I don't know that you'd get a lot of contributions through the internet, from places other than your local area - unfortunately, especially in the fall and early winter, pretty much every area has families who have lost everything in fires. Contributions are more likely to come from locals.

In this circumstance, often an account it set up at a local bank to receive contributions, and this information is publicized. Contact newspapers and area TV stations to give their situation publicity - they probably will.

Good luck.

Edit: No, you don't have to register anything with the IRS. "Setting up an organization" might sound a bit more formal than this actually is. It 's not an organization. The account at the bank should be set up in the family's name, and enables people who want to donate to have a way to do it. People can donate as much as they want to, and they'll probably get a number of donations since people tend to donate to worthy causes, not just donate for tax deductions. Those donations would be considered gifts to the family, and have no tax implications to them or to the donors.

You mention "before I or the family starts accepting donations" - you're much better off if everything goes directly from donors to the bank account that's been set up, and doesn't go through you.

You mention radio, which is real good - I'd try TV stations and newspapers too - I've seen similar situations publicized that way. Also maybe flyers in area establishments that have bulletin boards - around here, grocery stores and restaurants often have them. Nothing against the web page, hey, can't hurt, but I wouldn't expect much from that.

Kudos to you for trying to help this family get re-established.

2006-12-09 15:40:38 · answer #1 · answered by Judy 7 · 2 0

Judy gave a very good answer. The only thing I can think to add is this: The bank where you set up the account have probably done this type of thing before. They should be able to tell you more than we can.

2006-12-10 05:37:35 · answer #2 · answered by STEVEN F 7 · 0 0

you may no longer ask for donations without paying taxes on them; you may ask a economic employer to establish an account for the kinfolk...then every physique can donate to them and the kinfolk is to blame for the taxes. The donors won't get a tax exemption because of fact the kinfolk isn't a non income employer. wish this facilitates.

2016-10-14 09:16:43 · answer #3 · answered by ? 4 · 0 0

I don't know that this type of situation is tax deductible?? But certainly giving up to $12K as allowed,tax free, as a gift would reduce your taxable income for the year.

2006-12-09 15:29:48 · answer #4 · answered by luvfurypassionenergybabe 5 · 0 2

A sound, comprehensive answer from Judy, as usual. Please follow her advice.

Hope all goes well with your efforts, which I admire.

2006-12-10 00:22:10 · answer #5 · answered by skip 6 · 0 0

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