Taxpayer asks:
If I received $500 or say $5,000 in anonymous donations for brain surgery because I have no insurance, do I need to report that anywhere or as income?
thank you for any help tax girl.
Taxgirl says:
So long as these are pure gifts – and you didn’t make any representations as to promising any compensation or consideration (including services) in return – then they should not qualify as income. I’m also assuming that there was no representation to the donors that the donations were to be tax-exempt.
There may be gift tax consequences to the donors, depending on how much they donated. For more information, check out this prior post (with the caveat that the gift tax exclusion amount is now $13,000 per person per year): http://www.taxgirl.com/ask-the-taxgirl-taxable-gifts/
Like any good lawyer, I need to add a disclaimer: Unfortunately, it is impossible to give comprehensive tax advice over the internet, no matter how well researched or written. Before relying on any information given on this site, contact a tax professional to discuss your particular situation.
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I might extend on your thought with a quote from the redoubtable and much loved IRS Publication 950:
“Generally, the following gifts are not taxable gifts:
- Gifts not more than the annual exclusion for the calendar year (edit: now $13,000, as you noted)
- Gifts to your spouse
- Tuition or medical expenses you pay directly to a medical or educational institution for someone…”
The implication is that the Taxpayer in need of brain surgery (and we all feel like we do this time of year) could arrange for a generous donor to pay say $100,000 to cover the full cost of tab at the medical center of his choice, with non tax consequences for either the recovering patient or the generous donor. No gift tax applies, as long as the funds go direct to the institution.
Similarly, a doting aunt or fond friend could send a check for $55,000 to cover next year’s tab at Harvard for their favorite bright-eyed Cantababridgian. And even better, get that loving relative or friend to pick up the tab for a year or two of Law School to fund that JD or LLM. Again, no tax consequences for donor or donee, as long as the check goes direct to the institution.
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