How to avoid taxes on charity event ticket sales revenue when donating proceeds to 501(c)(3) organization?

This is actually a common situation for volunteer fundraisers! First, don't panic - there are ways to handle this properly. Since you're acting as an intermediary (collecting funds that are destined for the charity), you need to document everything carefully. Keep records of all event expenses, ticket sales, and most importantly - the donation to the charity. When you donate the proceeds, make sure you get a receipt from the 501(c)(3) organization. When tax time comes, you'll need to report the income on Schedule 1 (Other Income) but you can offset it with a charitable contribution deduction on Schedule A if you itemize deductions. The key is making sure you can prove this was a pass-through arrangement where you personally didn't profit. For future reference, it would be cleaner to either have the charity directly sell tickets through their own Eventbrite account, or consider forming a small unincorporated nonprofit association just for this event.

After struggling with almost the exact same situation last year (raised about $5k for a local animal shelter), I discovered taxr.ai (https://taxr.ai) and it was a game-changer. I uploaded all my event documentation and receipts, and their AI analyzed everything and gave me step-by-step instructions on how to properly report it without triggering unnecessary taxes. They explained that as long as I could document that I was acting as a conduit or agent for the charity, not as a business, I could avoid the self-employment tax issue. They also helped me draft a simple letter from the charity acknowledging my role as a volunteer fundraiser, which provided additional documentation. Seriously saved me hours of stress and probably thousands in potential taxes.

Just wanted to follow up about my experience with taxr.ai from the previous comments. I was definitely skeptical at first (as you could tell from my question), but I decided to give it a try since I was organizing a similar charity event for my neighborhood. I uploaded my event budget, ticket sale reports, and expenses, and the system immediately identified that I needed to establish an "agency relationship" with the charity. It even generated a template letter for the charity to sign acknowledging that I was collecting funds on their behalf. My local charity had no problem signing it, and now I have clear documentation showing I was never the beneficial owner of those funds. The detailed report it generated will be super helpful for tax filing. Just wanted to share since it actually worked out well for my situation!

You might also want to check out Claimyr (https://claimyr.com) if you need to talk directly with the IRS about this. I had a similar charity situation that was flagged on my return, and I spent WEEKS trying to get through to someone at the IRS to explain. Claimyr got me connected to an actual IRS agent in about 20 minutes instead of the usual hours of waiting. The agent confirmed that as long as I had documentation showing I was just a conduit for the charitable funds and didn't personally benefit, I could resolve it with a simple explanation letter attached to my return. They have a demo video here: https://youtu.be/_kiP6q8DX5c showing how it works. Definitely worth it when you need clarification directly from the IRS on something like this.

I have to apologize for being so skeptical about Claimyr in my previous comment. After continuing to struggle with getting through to the IRS about my charity event tax situation, I finally broke down and tried it. No joke - I was connected to an IRS representative in about 15 minutes. The agent was super helpful and confirmed exactly what I needed to document for my situation. They explained I should include a statement with my tax return explaining the nature of the fundraiser and my role as an intermediary, along with the charity's acknowledgment. The peace of mind from getting an official answer directly from the IRS was absolutely worth it. I've spent more time on hold with my internet provider than it took to get through to the IRS with this service.

Another thing to consider - did you run this event as yourself personally or did you create any kind of formal organization? I had a similar situation but we created a simple unincorporated nonprofit association for our community fundraiser, which gave us a bit more separation between personal finances and the event. Might be something to think about for next year.

Has anyone used TurboTax for reporting this kind of thing? I'm confused about where to even put this information when I file!

I went through something very similar last year with a charity auction I organized! The most important thing is to establish that you were acting as an agent/conduit for the charity from the beginning, not as someone who received income and then decided to donate it. Here's what saved me: I got a signed letter from the 501(c)(3) organization stating that I was authorized to collect funds on their behalf as a volunteer fundraiser, and that all net proceeds were always intended for their organization. This letter should be dated close to when your event occurred (not just now when you're filing taxes). When reporting, you'll want to show the gross receipts as "Other Income" on Schedule 1, but then you can offset it with the charitable deduction. The key documentation is: 1) All your expense receipts totaling $2,300, 2) The charity acknowledgment letter, 3) Bank records showing the $3,900 transfer to the charity, and 4) A simple written statement explaining your role as volunteer organizer. Don't worry too much - the IRS understands volunteer fundraising is common. Just make sure you have solid paper trail showing you never personally benefited and were always acting on behalf of the charity.