Need some tips on setting up online donations for paralyzed kid

[flavio]

You may have read the other thread about the kid I know who was shot and probably paralyzed for life.

I was thinking of setting up a website for donations through PayPal for the kids family. They don't have a ton of money and they're probably going to have to move from their condo to a wheelchair accessible place and get a van or something.

The problem is they are pretty frazzled still and I'd feel awkward asking them to setup a PayPal account. I could use my PayPal account and give them the money but I was thinking people might think I'm trying to profit off this tragedy.

Also I'm not sure if I need to deal with any tax issues on donations like this. Anybody got any thoughts?

So far alkemyst has given me the following information.

Donations for you would count as income. You would then need to figure out if you can 'gift' it under this situation or they'd have to claim it as income. If they were looking for donations they should set this up, you could do the legwork for them by contacting those places that cater to victims like this (wheelchair accessable companies would be a start).

This seems to indicate that if I took the donations through my account and gave it to them I would have to pay taxes on it. I wish I could just set up a PayPal account for them as I'm pretty sure they don't want to deal with it right now.

Any insights would be appreciated.

 

[kranky]

I do not think you would have to pay taxes as long as you can document the flow of money in and out.

How many people collect donations for March of Dimes, Muscular Dystrophy, etc. and give the money to the charities? They certainly aren't counting that money as income.

What would probably help things along is to get a bank account strictly for this purpose, call it the "Smith Family Fund" or something. Keeping all the money separate from any of your personal funds will be in your best interest. Banks do this all the time so they can help you through it. Make sure the account won't accrue interest, because if a 1099 form is issued on the account that will make things complicated.

Can you receive donations via PayPal and channel them right into the special bank account?

That way if you are ever questioned, you can show
1. A list of every donation received
2. The sum of all donations went into that one bank account
3. The total in the bank account was given to the family.

Now, whether that family has to declare that money as income is a separate issue.

 

[AmerDoux]

>snip<

poster above already mentioned going to a bank.

 

[Ns1]

ok.

the way this is going to go is that these people are going to gift you the money. they do not get to claim any deduction, and you do not have to recognize this as income.

you can then gift this back to the individual in question, up to 12k. after that you will be paying taxes. you also do not get to claim any deduction.

 

[nanette1985]

I have a disabled son, and I have a lot of random knowledge about this stuff. First, you need to go the nonprofit route, if you're going to raise money, and there are a lot of rules and regulations. Find an advisor, there are a bunch of them out there.

One important thing to know is that there is a lot of government and private support available, it's not perfect but it's out there. If you raise money for them, it can count as income and can mess up other kinds of support. I've seen this happen. As I say, talk to someone who knows about this stuff.

Thank you for what you are doing - it's great.