Crowdfunding income could be susceptible to income taxes
Crowdfunding or crowd sourcing has exploded in popularity with the launch of websites like GoFundMe.
Now, people are learning that money could come back to haunt receivers come tax time.
One Florida couple found that out the hard way.
They raised $50,000 through GoFundMe for medical bills after one of the spouses had a serious heart attack.
The IRS sent them a bill for $30,000.
Thankfully, their accountant was able to help them out of the jam. The couple kept all of the receipts from those medical bills and proved that they spent all of the money on those costs and the IRS erased the charge.
"This way if you know in July or August, you can prepare for the second half of the year, set some money aside for some estimated taxes and hopefully the penalties and interest," said Chuck O'Donnell, who is a certified public accountant.
GoFundMe states on their website that most donations are considered personal gifts and are not subject to income tax, it warns every situation is different and to consult a tax expert.
