This is actually a great point! Multiple support agreements can be really helpful when several people contribute. My family does this for my aunt - we all pitch in but no one person hits 50%.

This is really valuable information about SSI vs SSDI! I hadn't thought about how different types of disability benefits might be treated differently for tax purposes. You make a great point about confirming with my father first too. Even though he doesn't currently file, I should probably have that conversation to make sure we're not stepping on each other's toes. Better to sort that out upfront than deal with issues later. The spreadsheet idea is brilliant - I've been keeping receipts but not in any organized way. Do you track things like a percentage of utilities or groceries when you buy things that benefit your brother? I'm trying to figure out how detailed I need to get with the support calculation.

Great question about tracking expenses! For my spreadsheet, I do break down shared expenses proportionally. For example, if I buy groceries that benefit both my brother and the family he lives with, I estimate what percentage went to his needs specifically. Same with utilities - if I pay the electric bill for the house, I calculate roughly what portion supports him. I also track direct expenses separately (his medications, clothing, medical appointments, etc.) since those are easier to attribute 100% to his support. The key is being reasonable and consistent with your estimates. I keep notes explaining my calculations in case I ever need to justify them. One tip - take photos of receipts with your phone right away. I learned this the hard way when some of my paper receipts faded over the year! Also, if you pay for anything online for them, save those email confirmations and screenshots of the transactions.

Thanks for sharing your experience! That's reassuring. Did you get any kind of confirmation email when you initially submitted the extension? I submitted mine but only got a "we received your transmission" email, not an actual acceptance.

Does the Designated Fund Agent approach work for online payments too? Like if I want to set up a page where people can buy tickets with credit cards?

Yes, the Designated Fund Agent approach can work with online payments, but you need to be careful about how you set it up. The payment processor account should ideally be opened in the charity's name with you listed as an authorized user, rather than using your personal account. If that's not possible, make sure your written authorization from the charity specifically mentions online collection methods and payment processing. You'll want to transfer funds to the charity frequently (daily or weekly) rather than letting large amounts accumulate in your personal accounts. Also keep detailed records of all transaction fees - the charity can reimburse you for those processing costs without creating taxable income for you. Some payment processors like PayPal have special nonprofit rates that might save money too.

This is excellent advice! I'm new to organizing charity events and was getting overwhelmed by all the different approaches mentioned here. Having the charity handle the money directly from the start really does seem like the cleanest solution. One follow-up question - when you say "get a written agreement upfront," does this need to be something formal like a contract, or would a simple email from the charity board suffice? I want to make sure I have proper documentation but don't want to overcomplicate things for the small nonprofits I'm working with. Also, did you run into any issues with vendors who prefer to deal directly with the event organizer rather than the charity? Some of my potential vendors seem hesitant to work through a third party for payments.

The "Reasonable Basis" safe harbor can definitely strengthen your position, but it's not a simple concept to explain to clients. It essentially means that if you have a reasonable basis for treating workers as independent contractors (like following industry practice or relying on past IRS audits), you get additional protection. For S-corps specifically, there's substantial precedent supporting the classification distinction. I've had success creating a simple one-page addendum to proposals that specifically references Section 530 of the Revenue Act and how it applies to incorporated contractors with their own employees (even if that employee is just you as the owner). Including relevant case citations shows you've done your homework.

That's really helpful, thanks! I'll work with my accountant to put together something similar. Do you find that this approach works better with smaller companies or is it effective with larger corporations too?

Thanks for this insight! Yes, our bracelets have our organization's name and this year's event theme which is directly tied to our mission of supporting literacy in underserved communities. The bracelet says "Read Together 2025" which is our campaign slogan. We're expecting to make roughly $4,500 from the sales (charging $15 for bracelets that cost us $5 to make). Would an amount like that even be worth the IRS's attention? I've heard there might be some minimum threshold before they care.

That messaging connection to your literacy mission definitely strengthens your position that this is substantially related to your exempt purpose. The bracelets are promoting your specific campaign and mission, not just generic merchandise. Regarding the amount, there is a reporting threshold - you only need to file Form 990-T if your gross unrelated business income is $1,000 or more. However, that's a moot point if the activity qualifies as related to your exempt purpose, which yours seems to. The $4,500 profit margin isn't large enough to likely trigger special scrutiny, but it's always the nature of the activity rather than the amount that determines if UBIT applies.

Is there a specific percentage of total income that nonprofits should stay under to avoid UBIT becoming an issue? Like if this bracelet fundraiser is less than 10% of their total annual revenue, does that make it less likely for the IRS to care?

There isn't really a specific percentage threshold that creates a "safe harbor" from UBIT. The IRS evaluates each unrelated business activity on its own merits regardless of what percentage of total revenue it represents. However, you're right that smaller amounts tend to get less scrutiny in practice. The key factors are still: 1) Is it regularly carried on? 2) Is it substantially related to your exempt purpose? 3) Does it meet any specific exceptions? What matters more than the percentage is documenting why the activity IS related to your exempt purpose. In Mason's case with literacy-focused bracelets saying "Read Together 2025," that's a much stronger position than if they were selling generic merchandise that happened to raise money for literacy programs. The fragmentation rule Lorenzo mentioned is important though - even small unrelated activities can technically trigger UBIT if they don't qualify for an exception, regardless of your organization's overall mission focus.