Are GoFundMe Donations Deductible?
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With the advent of one natural disaster, we now have another one coming. As human beings we want to help those in need. When we see the tragedies in North Carolina and hear what will probably happen in Florida, we want to help. Many times, we do this through the giving of money to organizations which are working in the areas.
One method people use for this is GoFundMe. This is a crowdfunding method to raise money for purposes. People believe that by giving to GoFundMe it is a tax deductible donation like giving to the Red Cross, Salvation Army or church. The issue is it is not.
To be a tax-deductible donation, the organization you are given to must be recognized by the IRS as a Section 501c (3) organization. The organization has met certain IRS standards and maintains them. Just because money is being raised to help someone does not mean it is deductible.
The IRS maintains a list of the approved organizations on its website. You can find it here at Search for tax exempt organizations | Internal Revenue Service (irs.gov). If the organization is listed here, the IRS will allow you to consider your donation to be a tax-deductible donation. If it is not, then it is not allowed.
So, consider using organizations you know about such as Red Cross, Salvation Army, etc for giving. If not, realize at tax time, those donations given to GoFundMe, individuals, etc. are not going to be deductible.
As always, you should check with your tax advisor before doing any major transactions that could affect your income or tax filings.
After September 30, 2025, the IRS will NOT accept checks, money orders, cashier checks, etc. for payment of taxes, penalties, fines and interest. You will only be able to pay by ACH or with credit card. This does not affect the third quarter estimated individual tax payments which are due on September 15, 2025. It will affect every business and individual who will be making any form of payment thereafter. The fourth quarter estimate payment is due on January 15, 2025. You will not be able to pay this by check. It must be in some form of an electronic payment. You could go ahead now and make your fourth quarter estimate payment by September 15 along with the third quarter payment. You will need to designate the payment as fourth quarter and enclose any payment voucher you have. The estimate vouchers we give you do have instructions on how to pay online for both federal and state. What does this mean if you owe on your tax return? 1. You will have to arrange payment using the instructions that are included on your payment voucher. 2. If you have set up an individual account with the IRS, you may make the payment via that account. 3. Finally, we can arrange through our tax software to have the amount due deducted from your bank account. We must do this at the time of filing the return. Once the return is filed, we cannot refile it. We are going to offer another option. An individual estimated tax payment service. In this service we will arrange payment of your estimated payment each time one comes due. We will contact you about 2 weeks prior to the due date to confirm your information. We will then arrange for the estimate payment for both the federal and state. We will be offering this service for each quarter. For most of you it will be arranging payment of the estimates which we give you when you pick up your tax return. If you are one of our clients who we calculate up-to-date payments, you may add on this service. The cost of this service is $200 per year. If you are uncomfortable working with a computer, do not have time each quarter or just want to get it done, then this service is for you. If you are interested, please call Christina at the office to arrange a call to discuss this.
Many taxpayers don’t feel the need to keep home improvement records, thinking the potential gain when they sell their home will never exceed the amount of the tax code’s exclusion for home gains explained as follows. Under the current version of the tax code, you are allowed to exclude from your income up to $250,000 ($500,000 for married couples) of gain from the sale of your primary residence if you owned and lived in it for at least 2 years (24 months) of the 5 years before the sale. You also cannot have previously taken a home-sale exclusion within the 2 years immediately preceding the sale. There is no limit on the number of times you can use the exclusion if you meet these time requirements; however, extenuating circumstances can reduce the amount of the exclusion. The home-sale gain exclusion only applies to your main home, not to a second home or a rental property. As noted above, you must have used and owned the home for 2 out of the 5 years immediately preceding the sale. The years don’t have to be consecutive or the closest to the sale date. Vacations, short absences, and short rental periods do not reduce the use period. If you are married, to qualify for the $500,000 exclusion, both you and your spouse must have used the home for 2 out of the 5 years prior to the sale, but only one of you needs to meet the ownership requirement. When only one spouse in a married couple qualifies, the maximum exclusion is limited to $250,000 instead of $500,000. If you don’t meet the ownership and use requirements, there are some situations in which a prorated exclusion amount may be possible. An example of this situation would be if you were required to sell the home because of extenuating circumstances, such as a job-related move, a health crisis or other unforeseen events. Another rule extends the 5-year period to account for the deployment of military members and certain other government employees. Please call this office if you have not met the 2 out of 5 rule to see if you qualify for a reduced exclusion. But what if your home sale gain is more than the home sale exclusion? Then it is in your best interests to have kept home improvement records, since the costs of improvements can be added to your purchase price of the home to be used in determining the gain. So keeping the receipts for the improvements, even if only in a folder or a shoe box, may be useful in the future when you sell your home. Here are some situations when having home improvement records could save taxes: The home is owned for a long period of time, and the combination of appreciation in value due to inflation and improvements exceeds the exclusion amount. The home is converted to a rental property, and the cost and improvements of the home are needed to establish the depreciable basis of the property. The home is converted to a second residence, and the exclusion might not apply to the sale. You suffer a casualty loss and retain the home after making repairs. The home is sold before meeting the 2-year use and ownership requirements. The home only qualifies for a reduced exclusion because the home is sold before meeting the 2-year use and ownership requirements. One spouse retains the home after a divorce and is only entitled to a $250,000 exclusion instead of the $500,000 exclusion available to married couples. There are future tax law changes that could affect the exclusion amounts. Everyone hates to keep records but consider the consequences if you have a gain and a portion of it cannot be excluded. You will be hit with capital gains (CG), and there is a good chance the CG tax rate will be higher than normal simply because the gain pushed you into a higher CG tax bracket. Before deciding not to keep records, carefully consider the potential of having a gain more than the exclusion amount. Home improvements include just about anything that will increase the value of the home, from big ticket items like remodeling a kitchen, adding another room or a swimming pool, and landscaping to smaller items like ceiling fans. But there are some home improvements that cannot be included in the cost of home improvements, or may be only partly included. Examples are items which qualify for tax credits such as home solar, home energy efficient improvements or those that qualify for a tax deduction such as handicap improvements. In addition, the costs of general maintenance or repairs, such as fixing leaks, painting (interior or exterior), and replacing broken hardware do not count as improvements. If you have questions related to the home gain exclusion or questions about how keeping home improvement records might directly affect you, please give this office a call.
With the signing of the One Big Beautiful Bill Act (OBBBA) many of the environmental credits that were in place and set to expire sometime in the future have now been moved up in their expiration dates. Below is a list of the credits set to expire and when they are to expire. Expiring after September 30, 2025 • Previously Owned Clean Vehicle Credit • Clean Vehicle Credit • Qualified Commercial Clean Vehicle Credit • Alternative Fuel Vehicle Refueling Property Credit To claim credit before the expiration date, you must purchase/install and have title to the property. Expiring after December 31, 2025 • Energy Efficient Home Improvement Credit • Solar Energy Credit • New Home Energy Efficient Home Credit To claim credit before the expiration date, the property must be installed, be functional and if necessary, approved by local agencies before the expiration date. If you have any questions about any of these credits, please contact your tax advisor or call us to discuss.