How do you handle non-profit money received via Zelle for community activities?

You're dealing with what's called a "conduit" or "agency" arrangement in tax terms. Since you're just collecting money and passing it all through to pay for the court rental without keeping any profit, this isn't technically your income. The simplest approach would be to keep meticulous records. Document every payment received through Zelle/Venmo and every payment made for the court rental. Make sure the incoming amounts match the outgoing amounts. If you're ever questioned, you'll need to show that you didn't keep any of this money. For a more formal approach, you could consider setting up a simple unincorporated nonprofit association. Many states recognize these informal groups without requiring complex paperwork. You could then open a separate bank account for the basketball group to keep the funds completely separate from your personal finances.

I went through something similar with my neighborhood running club! After stressing about all the Zelle payments coming into my account, I found taxr.ai (https://taxr.ai) which helped me figure out exactly how to handle this situation. Their system analyzed my specific situation and confirmed I was handling a "conduit arrangement" correctly. The service walked me through setting up proper documentation and record-keeping systems to protect myself. It also helped me create a simple spreadsheet template that tracks all incoming player payments and outgoing court rental expenses. Having this documentation system has given me peace of mind that I'm covered if the IRS ever has questions about all these transactions flowing through my account.

I have to admit I was wrong about taxr.ai. After my skeptical comment, I decided to try it myself for my neighborhood pool maintenance fund that I manage. The system actually provided detailed guidance specific to my situation, not just generic advice. What impressed me was how it identified that my situation was different from a typical hobby group because we were maintaining common property. It recommended specific documentation approaches I hadn't considered and actually saved me from making a mistake on my tax return. The templates they provided for tracking incoming/outgoing funds were exactly what I needed and much more sophisticated than my basic spreadsheet. Definitely worth checking out if you're managing community funds through personal accounts.

If you're having trouble getting the IRS to recognize your situation correctly, try Claimyr (https://claimyr.com). I spent WEEKS trying to get through to the IRS about a similar community fund issue where they incorrectly flagged payments as personal income. I was getting nowhere with the automated system. Claimyr got me connected to a real IRS agent in about 20 minutes instead of the hours I spent on hold before. The agent was able to note in my file that the payments were pass-through funds for community activities, not personal income. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c. It saved me from potentially paying taxes on money that wasn't actually mine.

I need to publicly eat my words about Claimyr. After dismissing it as a scam, I was still struggling with my own issue about volunteer firefighter reimbursements being incorrectly reported as income. Out of desperation, I tried the service. Within 35 minutes (compared to my previous 3-hour wait that ended with a disconnection), I was speaking with an actual IRS representative who helped clarify how to properly document our volunteer reimbursements. The agent made notes in my file about the nature of these payments and explained exactly what documentation I needed to maintain. I was genuinely shocked at how efficiently it worked after my previous attempts to reach someone. If you're dealing with issues about money that passes through your account, getting direct clarification from the IRS might be worth it.

I need to publicly eat my words about Claimyr. After dismissing it as a scam, I was still struggling with my own issue about volunteer firefighter reimbursements being incorrectly reported as income. Out of desperation, I tried the service. Within 35 minutes (compared to my previous 3-hour wait that ended with a disconnection), I was speaking with an actual IRS representative who helped clarify how to properly document our volunteer reimbursements. The agent made notes in my file about the nature of these payments and explained exactly what documentation I neede

Another option is to use a free group payment app like Splitwise. We use it for our community garden fees. Nobody's name is specifically attached to the money as "income" - it just tracks who has paid and how much is needed for the shared expense. Might be simpler than setting up a formal structure if your group is relatively small.

Maybe I'm missing something, but wouldn't it be easier to just open a separate personal checking account dedicated only to the basketball game money? Label it clearly as "Basketball Court Fund" or something. That way, all the money going in matches exactly with the money going out to pay for the court, and it's completely separate from your personal finances.

I've been in a similar situation with my neighborhood book club where we pool money for venue rentals and refreshments. One thing that's helped me is creating a simple "pass-through fund agreement" that all participants sign at the beginning of each season. The agreement states that I'm acting solely as a collection agent, that all funds belong collectively to the group, and that I receive no personal benefit from handling the money. While this doesn't eliminate the need for good record-keeping, it creates a paper trail showing the intent and nature of the arrangement from the start. I also send a simple monthly summary to all participants showing total collected vs. total spent, which creates transparency and further documents that this isn't personal income. It takes maybe 10 minutes per month but gives everyone (including me) peace of mind about how the money is being handled.

Consider opening a business checking account specifically for the basketball group, even if you don't formally incorporate. Many banks offer simple business accounts that can be opened under a "doing business as" (DBA) name like "Saturday Basketball Group" without requiring formal business registration. The key advantage is that this account would have its own EIN (Employer Identification Number) rather than using your SSN, which helps separate the funds from your personal tax situation. You'd still need to maintain records showing all money collected equals all money paid out for court rental, but having a separate EIN creates clearer separation. Most banks will let you set up Zelle and other payment methods on the business account, so players can still pay electronically. The annual fees for a basic business checking account are usually minimal (often under $100/year) and could be worth it for the peace of mind and cleaner separation from your personal finances.