Do You Have to Pay Taxes on a Fundraiser?

Wondering about the potential taxes associated with popular online fundraising options, including mobile cash apps like Venmo, Zelle, and PayPal – or Facebook Fundraisers and GoFundMe? Not sure whether you have to pay taxes on fundraiser money?

It’s not always made clear whether funds you raise will be considered taxable income – that’s why we wrote this post.

Be sure you understand the potential tax implications of fundraising through these platforms and through our nonprofit Help Hope Live before you start fundraising.

As of November 31, 2023, Facebook no longer allows you to start a “personal” or “personal cause” Facebook Fundraiser.

If you work with a nonprofit like Help Hope Live for fundraising, you can still use Facebook Fundraisers to fundraise for a nonprofit.

With nonprofit Facebook Fundraisers, the funds you raise go directly to the nonprofit of your choice (such as Help Hope Live). As a result, the funds are nonprofit donations, and they are not personal taxable income to the individual who started the Facebook Fundraiser.

When donations from Facebook Fundraisers come to Help Hope Live in honor of a client, the client will not owe taxes on those funds.

Help Hope Live maintains full discretion and control over all the funds raised in honor of our clients. Because of our unique model, ALL the funds that arrive in honor of our clients—whether via check, online donation, or Facebook Fundraiser—funds raised are not personal taxable income or assets for clients.

Start with our Facebook Fundraiser guide if you’d like to start a Facebook Fundraiser to benefit Help Hope Live in honor of a client.

More people than ever are turning to cash apps like Venmo, PayPal, and Zelle to raise funds for personal causes.

While using a cash app to collect contributions may feel like a quick and easy way to get community support, always remember that receiving funds that may be considered “personal income” can leave you on the hook for the associated taxes.

As Forbes reported, these cash apps planned to automatically report any funds you receive over $600 to the IRS by 2023. However, the IRS’s update in November 2023 delayed this implementation.

This policy will extend to online buying-and-selling platforms like Ebay and Mercari.

According to the current tax policy as of 2024, Venmo and PayPal will exempt users who receive funds on these platforms if they do not meet the threshold of $20,000 and 200 transactions for the 2023 tax year.

Keep in mind that if you use these apps for fundraising, you may not know you’ve exceeded the threshold until you owe taxes on the funds.

So for the strongest possible protection, work with a nonprofit like Help Hope Live for medical fundraising instead of fundraising through these options.

Funds you raise through apps like Venmo and PayPal go directly into an individual’s bank account or become available in their cash app accounts for personal use.

As a result, these funds are typically taxable as personal income under fundraising tax laws.

Some personal contributions are not taxable for the recipient—examples include reimbursement from a friend, a roommate’s share of the rent, or funds that are considered a “gift” to the recipient. However, it is up to the recipient of these funds to carefully track each contribution plus its intention and use and report the details when they file their taxes.

For cash app fundraisers that garner hundreds or thousands of donations, it may be a big burden for the recipient to take this additional record-keeping step throughout the fundraising process.

While using a cash app to collect contributions may feel like a quick and easy way to get community support, always remember that receiving funds that may be considered “personal income” can leave you on the hook for the associated taxes.

Some funds raised through a cash app can be considered “personal contributions” that are not taxable for the recipient—examples include reimbursement from a friend, a roommate’s share of the rent, or funds that are considered a “gift” to the recipient.

It is up to the recipient of these funds to carefully track each contribution, plus its intention and use, and report the details when they file their taxes.

When you use any of these kinds of platforms to fundraise, you are responsible for tracking the funds raised and their intended use and ensuring there is a way to verify the giver’s intent when they sent funds to you.

This may be a large burden, especially if you or someone you care about is already dealing with a medical emergency or other urgent need.

Explore all your options before you start fundraising, and look for options like Help Hope Live that provide the greatest possible protection for patients who engage in medical fundraising.

When it comes to taxes, GoFundMe offers a complicated view of the funds that individuals raise through their platform.

While some GoFundMe campaign donations may be considered “personal gifts” that don’t lead to tax implications for the recipient, there are no guarantees.

Starting a GoFundMe means taking on the risk that the recipient of the funds will be liable for associated taxes.

There are several factors that potentially influence whether GoFundMe funds are taxable for the beneficiary, included the “intended use” of the funds and the total raised.

As with cash apps and other fundraising pathways, it’s up to the recipient of the funds (or their community) to correctly document the funds raised and navigate the specific tax implications that may apply to their fundraiser.

At Help Hope Live, we believe that fundraising should be about community support, generosity, and meeting critical needs—not navigating the tax system.

That’s why we manage all the funds raised in honor of our clients: to prevent those funds from becoming income or assets to our clients that may demand subsequent tax payments.

Out of all the fundraising options available to you, from GoFundMe campaigns and cash apps, Help Hope Live is the only option that offers true relief and protection regarding tax obligations for individuals who need community support and secure financial assistance.

Funds raised typically do not jeopardize a client’s eligibility for state-based benefits, either, such as Medicaid or SSDI.

Contributions are tax deductible for donors, and each campaign is medically verified—two more protections that allow donors to feel secure so clients can ask for help from their communities with confidence.

Our Advantage

FAQs

Always keep in mind that while we know our nonprofit inside and out, we are not tax professionals.

If you have tax-related questions about the content in this post and need further guidance, ask for help from a tax expert.

Fundraising Tips

Written by Emily Progin