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1099K - Go Fund Me

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Level 1
last updated ‎March 04, 2020 7:13 PM

My client's brother had a fire that totally burned his house right before Christmas. My client started a Go Fund Me account for him and it raised over $78,000.

So, my client received a 1099-K because she set up the account with her name, info & SS. All money received went to her brother and his family.

I'm having a hard time finding any info on the IRS site regarding this.

How do I report this?

Thanks for any help you can give me.

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Level 8
last updated ‎March 04, 2020 7:13 PM

Just a suggestion:

Fill out the 1099-K as other income and at the bottom of the worksheet you can make an adjustment equal to the amount on the 1099-K.  Effectively zero'ing out the income.  it will flow to the other income section under 1099-K income.

Add a Miscellaneous Statement form and explain your rational for the adjustment (gifting)

my $0.02

 

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Level 8
last updated ‎March 04, 2020 7:13 PM

Good article that may give you some insight.

https://www.thebalance.com/do-you-have-to-pay-taxes-on-crowdfunded-money-4773839

TLDR:  If the intent was to give the money to the brother (and did) and the money collected was considered gifts from the donors it may not be taxable.

IRS is grey on this area

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Level 1
last updated ‎March 04, 2020 7:13 PM

Great article! Thanks!

Would I enter the 1099K then follow it with a negative of the amount to zero it out? Do thye have to paper file with an explanation?

 

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Level 8
last updated ‎March 04, 2020 7:13 PM

Just a suggestion:

Fill out the 1099-K as other income and at the bottom of the worksheet you can make an adjustment equal to the amount on the 1099-K.  Effectively zero'ing out the income.  it will flow to the other income section under 1099-K income.

Add a Miscellaneous Statement form and explain your rational for the adjustment (gifting)

my $0.02

 

View solution in original post

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Level 10
last updated ‎March 04, 2020 7:13 PM

Since it's a nominee distribution, she could give a 1099-K to her brother.  

Not the best solution, but not any worse than the "add it back in and subtract it back out" method.  I often wonder if that raises more eyebrows at IRS than just omitting excluded income in the first place.  

When I hear stories about IRS auditors asking taxpayers for a copy of their return because they don't have it available themselves, I don't put much faith in attached statements.  But if you are going to attach an explanation, just do it without a line entry.  

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Level 12
last updated ‎March 04, 2020 7:13 PM

Individuals use 1099-M, not 1099-K. K is for Payment Settlement agents.

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