Is GoFundMe for Medical Expenses Tax Deductible?
Key takeaways:
If you receive funds from a GoFundMe campaign to pay for your medical expenses, they are generally tax-free. The reason is that this is a gift.
If you donate money to a GoFundMe campaign to pay for a person’s medical expenses, this payment is not deductible. You're only allowed to deduct donations made to GoFundMe charity fundraisers.
GoFundMe recipients generally will not receive a Form 1099-K for the funds raised.
Table of contents
About 3 million people have medical bills that exceed $10,000. Many people turn to crowdfunding platforms such as GoFundMe to help pay their medical debt. Although you can start a campaign in a few minutes, there are certain pros and cons, including tax considerations, that you should be aware of.
Generally, funds received from your GoFundMe campaign to pay your medical bills are tax-free. But there are exceptions, such as if you provide donors goods or services in exchange for their donations. Also, If you contributed to someone else’s campaign to help them pay medical expenses, the donation won’t qualify as a tax write-off unless it was made to a GoFundMe charity fundraiser.
Do you have to pay taxes on the money you receive from GoFundMe?
Generally, you will not owe taxes on donated funds you receive from a crowdfunding platform. The IRS considers the money received from GoFundMe to be a gift instead of income, so it is typically not taxable. A gift is any transfer of cash or property you make to an individual without receiving full consideration in return, according to the IRS. People who donate money to GoFundMe to help pay for medical expenses are typically doing it out of generosity and do not expect anything in return.
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Let’s say you set up a GoFundme campaign to help you pay for a 28-day supply of Mounjaro to manage your Type 2 diabetes. You raise $1,100 from your friends, family members, and strangers through GoFundMe. The money you raised is considered a gift because the donors did not receive any direct benefit from the donations. They supported the GoFundMe campaign out of generosity.
How does GoFundMe work for medical expenses?
Setting up a GoFundMe account to pay your medical bills is free, but you will have to pay fees on the funds you raise. This amounts to 2.9% of the amount donated, plus $0.30, and it is automatically deducted from each donation.
For example, if someone donates $1,000 to help you pay your medical bills, GoFundMe will deduct $29.30 ($29.00 + $0.30), and you’ll receive $970.70. A donor can also leave a tip on GoFundMe.
Before you start a GoFundMe to pay your medical bills, there are a few pros and cons you should consider, such as sharing the details of your medical condition and promoting our campaign.
If you’re wondering what medical expenses you can fundraise for, here are some examples of expenses for which others have used GoFundMe donations:
Category | Description |
|---|---|
Costs for managing conditions such as cancer, heart disease, and diabetes | |
Costs for procedures including cardiac catheterization, hip replacement and reconstructive surgeries | |
Expenses for items such as home hospital beds, prosthetic limbs, and hearing aids | |
Medications including Ozempic (semaglutide) and Mounjaro (tirzepatide) for Type 2 diabetes and Saxenda (liraglutide) for weight loss | |
Costs for counseling and psychotherapy | |
Physical rehabilitation and therapy | Costs for physical therapy, occupational therapy, or speech therapy |
How do charitable tax deductions work?
The IRS allows tax deductions for charitable purposes if they are for approved nonprofit organizations. If you contribute to a GoFundMe charity fundraiser in the U.S., you will receive a receipt from the PayPal Giving Fund, which is the charitable partner for GoFundMe. However, you may still need to keep other records for tax purposes, such as a receipt for your donation from the charitable organization. It’s important to work with a qualified tax professional to ensure you have sufficient documentation.
Keep in mind that charitable tax deductions come with limits. Generally, you must itemize your deduction on Schedule A to take the charitable tax deduction. Your deduction is limited to 20% to 60% of your adjusted gross income, depending on the following:
Type of organization you give money to
Nature of the donation, such as if the organization is a private foundation or public charity
Type of donation (cash or property)
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Personal donations to a GoFundMe campaign, such as helping someone pay for medical expenses, are not deductible since they are not made to an IRS-approved nonprofit.
Do you need to pay gift taxes on the money you donate?
If your donation to a personal GoFundMe campaign exceeds the annual limit, you may need to file a gift tax return. In 2023, for example, the annual gift tax limit was $17,000. That number went up to $18,000 in 2024. Although you may be required to file a gift tax return, this does not automatically mean that you will owe federal gift taxes. The IRS provides a lifetime gift tax exemption, which allows you to give away a certain amount of money during your lifetime without being subject to federal gift taxes. For 2023, the lifetime gift tax exemption is $12.92 million. The exemption increased to $13.61 million for 2024.
Let’s say you donate $20,000 to a GoFundMe fundraiser to help a friend pay for IVF treatment. Since your donation exceeds the annual exclusion limit for the gift tax, you will need to file Form 709 to report the transaction. However, you may not have to pay taxes on the gift if the total amount you have given away during your lifetime does not exceed the lifetime gift tax. If your donations exceed the annual threshold, you should reach out to a qualified tax professional for more guidance.
When is crowdfunding taxable?
Raising funds through a crowdfunding platform may be taxable in certain situations. As stated above, if you raise money for a personal cause, such as getting help to pay for a medical bill, those funds are typically considered a gift if the donor doesn’t receive any product or service in exchange. But there are two situations when you may have to consider taxes:
Your employer makes a contribution to your GoFundMe campaign. The IRS typically does not classify donations made by your employer as a gift. Those proceeds would generally be reported as part of an employee's gross income.
A donor receives goods or services in exchange for the donation. This would be treated more like a sale instead of a donation. Therefore, the profits you received may be included as taxable income.
For example, suppose you are running a crowdfunding campaign to pay for your medical expenses. If you offer a custom-designed T-shirt in exchange for the donations, your crowdfunding proceeds may be taxable. You may receive Form 1099-K, a report of payments you received for goods or services during the year, to calculate your taxable income when you file your tax return.
Will you need to pay taxes if you receive Form 1099-K from GoFundMe?
Regardless of whether you receive a Form 1099-K from a crowdfunding website or third-party process, you are still required to report any income on your tax return. The following types of income are taxable unless specifically excluded by law:
Money
Goods
Services
Property
When you set up a GoFundMe account, you will need to agree to terms and conditions. This agreement requires you to confirm that donors do not receive any goods or services in exchange for donations to your GoFundMe fundraising campaign. Because of this agreement, GofundMe will usually not send any tax documentation, such as a Form 1099-K, for your activity on the platform. Also, GoFundMe will not report the donations you received to pay your medical bills as earned income.
The IRS may require GoFundMe or its payment processor to report distributions of money received from a fundraising campaign if you meet certain reporting thresholds. In this case, the crowdfunding platform would be required to file Form 1099-K with the IRS and provide you with a copy. However, if the donors did not receive any goods or services for their donations, the American Rescue Act confirmed that neither the crowdfunding website nor its payment processor is required to file Form 1099-K.
The bottom line
When you receive funds from a GoFundMe campaign to help you pay for medical expenses, the IRS considers this a gift, which is generally not taxable. You most likely won’t receive a 1099-K, because you are not giving donors an incentive, such as services or products, in exchange for their donations. If you donate funds to a campaign, you cannot take a deduction unless the money is donated to an IRS-approved charity. It’s important to work with a qualified tax professional if you have any questions about GoFundMe taxes or charitable donations.
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References
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Internal Revenue Service. (2023). Frequently asked questions on gift taxes.
Internal Revenue Service. (2023). IRS announces delay in Form 1099-K reporting threshold for third party platform payments in 2023; plans for a threshold of $5,000 for 2024 to phase in implementation.
Internal Revenue Service. (2023). What's new - estate and gift tax.
Internal Revenue Service. (2024). About Form 709, United States gift (and generation-skipping transfer) tax return.
Internal Revenue Service. (2024). Gift tax.
Internal Revenue Service. (2024). Taxable income.
Internal Revenue Service. (2024). Topic no. 506, charitable contributions.
GoFundMe. (n.d.). Tips for promoting your fundraiser online.
GoFundMe. (n.d.). How GoFundMe works.
GoFundMe. (2023). Taxes for organizers.
GoFundMe. (2023). Tax information for donors.
GoFundMe. (2024). Learn about fees.
Massachusetts Department of Revenue. (2020). Massachusetts reporting requirements for third party settlement organizations – Form 1099-K.
Rakshit, S., et al. (2024). The burden of medical debt in the United States. KFF.
Vermont Department of Taxes. (n.d.). 1099-K notices | Frequently asked questions.
Virginia Department of Taxation. (n.d.). Did you receive a 1099-K? What you need to know.
This article is solely for informational purposes. This article is not professional advice concerning insurance, financial, accounting, tax, or legal matters. All content herein is provided “as is” without any representations or warranties, express or implied. Always consult an appropriate professional when you have specific questions about any insurance, financial, or legal matter.
