Paying tax on donations?

Question

I have a site that people are "donating" to, by paypal. I make it clear to them they are donating, and not paying for a service or item. Do I still have to pay taxes on it?

Answer 1

Are you a registered charity with the IRS? If not, the irs might say that it is income, although anyone can give a gift to anyone else, and gifts are never taxable to the person who receives them. I've never run across this before, but based on the rules, you aren't offering a service or anything, so I would say that it's a gift to you, and gifts aren't taxable. But the people don't get a tax deduction for their donation to you, unless you are a registered charity.

Answer 2

I only know of two ways you can avoid tax on these donations: register as a non-profit charity or convince the IRS that people are giving you gifts.

Gifts are tax-free, and if your Web site is nothing but a plea for gifts you could probably persuade the IRS that you are getting gifts. If you have a Web site that provides anything useful for the donors, then there is an exchange of money for service, no matter what boilerplate you put in about not paying for a service. I think it's the electronic equivalent of a tip jar, and tips are taxable, so I think you'll have a hard time convincing the IRS you are getting gifts. On the positive side, all your expenses of running the site can be deducted, and you could wind up with a business loss and an overall deduction.

Answer 3

Depends on too many factors. Best thing to do and might save you a whole lot of grief here. Speak with an accounting firm or seek assistance from IRS. Is it donation because you say it is or because it is a write-offable one. (yes we are an accounting firm). You didn't quite make that clear.

So someone tells me it is donation. My question is, is it going to be tax deductible. Like many of our clients. Okay fine, we'll give Mary $20.00 cause she lost her dog but other than that we are not just going to give out money to places that contend they we will get tax break in doing so. Aka, we want to know.

Aka talk with accounting firm or IRS. There are so many places that people donate to and they find out in the end whamo I just got screwed. Why, because they are not "legitimate" non-profits classified as such with Revenue. Did you know that the Church of Scientology is not a church in Revenue's eyes. Oh but I know many think it is. (smiles)

Oh and P.S. Non-Profits classified as such with Revenue do have determination letters. Okay, let's say for example you say it is donation to me. Can I write it off. Hmmm, I think revenue not the one telling me this will make that decision. What do you think?

Okay what would we do. Make sure they can be written off. Do your research of don't come crying to us that someone just jerked me out of a $100.00 or more. Not our problem. (smiles). If we do not tell clients that then you have a case of idiocy on our parts.

You know your question is somewhat strange actually. We might have to agree with some responses. Legitimate charities would probably provide more information as to business name cause etc. I mean it is about donations. We know cause we do work with Red Cross and Also Special Olympics and I would think they would give out that information. I mean heck one of us might donate to something here even though we answer questions. We are not devoid of money; after all we can afford these idiot puters.

No offense but question is very lacking. And why Evil Bob. This is funny too. Legitimate charitable organization and they use Evil Bob as a log in name? Save yourself problem Mr. Bob and ask Revenue and if it is a good thing and not organized under I.R.C. check it out My good man. It is worth it. People love to see that word. It is a tax deductible contribution. That says to me. yippppppe I can save money and still be nice guy.

Have a nice day.

BC Business Services, Inc.
Http://www.bcbsinc.com

Answer 4

All incomes are taxable.

Answer 5

it's income. you are not a registered charity