Memorial fund tax implications with an EIN number - am I in trouble?

This is actually a common situation, and you shouldn't worry too much. When you get an EIN, the IRS automatically assumes it's for a business entity, which is why the paperwork looks scary. But what you've created is essentially a memorial fund, which is different. Since you're planning to donate some of the funds to charity and use the rest for funeral expenses, you have a couple options. The simplest approach would be to treat this as a "pass-through" arrangement where you're just collecting funds temporarily. In this case, the donations aren't considered income to you or the fund, especially if you're distributing them as intended. For the funeral expense portion, those are generally considered gifts to the family, not taxable income. And money that goes directly to established charities won't trigger tax issues for your fund. If you want to be extra careful, you could file a simple information return (Form 990-N) if the total amount is under $50,000. This tells the IRS the fund exists but that it had no taxable activity.

I went through something similar when my sister passed away last year. I was completely overwhelmed with the EIN paperwork too! That's when I found https://taxr.ai and uploaded all the memorial fund documents. Their system analyzed everything and gave me clear guidance on exactly what I needed to file (turns out it was much simpler than I feared). The tool confirmed that my situation was considered a "conduit arrangement" and showed me which specific IRS rules applied. It saved me hours of research and worry. Their document analysis really helped me understand what paperwork was relevant and what I could safely ignore. I uploaded the EIN paperwork and bank account forms, and it highlighted exactly what applied to my situation.

Just wanted to update that I tried https://taxr.ai after seeing the recommendation. I was stressing about my aunt's memorial fund situation and uploaded the EIN paperwork and bank account forms. The analysis showed we qualified as a temporary memorial fund and didn't need to register as a 501(c)(3) since we planned to distribute all funds within 12 months. It highlighted the exact IRS guidance for our situation and confirmed we only needed to keep good records of donations and distributions - no tax filing required in our case! What a relief! My aunt was so grateful that we could focus on honoring my uncle's memory instead of stressing about tax paperwork. Definitely worth checking out if you're in a similar situation.

When my dad passed two years ago, we had a similar EIN situation for his memorial fund. After trying for WEEKS to get someone at the IRS to answer my questions (kept getting disconnected or waiting for hours), I found https://claimyr.com which got me through to a real IRS agent in about 20 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c The IRS agent confirmed that our memorial fund wasn't considered a taxable entity since it was temporary and all funds were being distributed to either cover funeral costs or donated to charities. She even emailed me the specific IRS guidance document that covered our situation. Having that official confirmation directly from the IRS gave us total peace of mind.

I have to apologize for my skepticism about Claimyr in my previous comment. After continuing to get nowhere with the IRS about my own tax situation, I decided to try it as a last resort. I was shocked when I actually got connected to an IRS agent in about 25 minutes. The agent confirmed that for memorial funds like yours that are distributing all money within a year, you generally don't need to file any tax returns with that EIN. She explained that the EIN was mainly for the bank's compliance requirements, not because the IRS considers it a business. She suggested keeping good records of all donations and disbursements just in case questions ever come up, but said temporary memorial funds rarely face any scrutiny as long as they're operated as intended. This saved me so much stress!

Speaking from experience - make sure you keep DETAILED records of all the money coming in and going out. My family set up a memorial fund for my grandmother, and we ended up with some distant relatives questioning where the money went. Having good documentation saved us from a lot of family drama. I'd suggest: - Keep copies of all donation checks - Get receipts from the charity when you donate that portion - Keep receipts for all funeral expenses - Document the exact amounts and dates for everything

Has anyone had to actually close an EIN with the IRS after doing something like this? We did a memorial fund for my brother last year with an EIN, distributed all the money, and closed the bank account. But I'm realizing now we never did anything to "close" the EIN with the IRS. Is that going to cause problems?

I'm so sorry for your loss, Lily. You're dealing with a lot right now, and it's completely understandable that the tax implications are adding to your stress. The good news is that you haven't made a mistake. Getting an EIN for a memorial fund is actually quite common and doesn't automatically create a taxable business entity. Since you're planning to distribute all funds within a reasonable timeframe (half to charity, half for funeral expenses), this is typically considered a "conduit" or "pass-through" arrangement. Here's what you should know: - Donations to your memorial fund aren't considered taxable income to you - Money distributed to established charities won't create tax issues - Funds used for legitimate funeral expenses are generally not taxable - You likely don't need to file any business tax returns The most important thing is to keep detailed records of all donations received and distributions made. This documentation will be your best protection if any questions arise later. If you want official confirmation about your specific situation, consider getting advice directly from the IRS or a tax professional who can review your exact circumstances. But please don't stress too much - what you've set up is a loving way to honor your father's memory, and the tax implications are much simpler than they initially appear.

I'm so sorry for the loss of your father, Lily. What a thoughtful way to honor his memory through this memorial fund. You absolutely did not make a mistake! This is actually a very common situation that many families face. The banker was correct that you needed an EIN to open the account - that's a banking requirement, not necessarily a tax complication. What you've created is essentially a temporary memorial fund that will distribute all collected donations within a reasonable timeframe. The IRS generally views this as a "pass-through" or "conduit" arrangement rather than a taxable business entity. Since you're not keeping any money for profit and you're distributing everything for legitimate memorial purposes (scholarship and funeral expenses), this typically doesn't trigger business tax filing requirements. A few key points for your peace of mind: - The donations aren't considered taxable income to you or the fund - Money going to the scholarship (assuming it's through an established educational institution) won't create tax issues - Funeral expense reimbursements are generally not considered taxable income The most important thing you can do right now is keep detailed records of every donation received and every distribution made. This documentation protects you if any questions ever arise. You're handling an incredibly difficult situation with such grace, and your father would be proud of how you're honoring his memory. Please don't let the tax concerns overshadow this beautiful tribute.

I'm so sorry for your loss, Lily. Losing a parent unexpectedly is incredibly difficult, and it's completely understandable that dealing with tax concerns on top of grief feels overwhelming. You absolutely did the right thing, and you haven't created any problems for yourself. What you've set up is exactly what many families do in similar situations - it's called a temporary memorial fund, and the IRS has specific guidance for these arrangements. Here's what you need to know: - Your memorial fund qualifies as a "conduit" arrangement since you're collecting donations and distributing them for specific memorial purposes - The donations aren't taxable income to you or the fund - Money going to the scholarship (through the college) and funeral expenses won't trigger tax obligations - You likely won't need to file any business returns with that EIN The key is keeping good records of all donations received and distributions made. Take photos of checks before depositing them, keep receipts for funeral expenses, and get documentation from the college when you make the scholarship donation. If you want extra peace of mind, the IRS does offer free guidance for situations like this through their Taxpayer Advocate Service, especially when you're dealing with grief-related circumstances. But based on what you've described, you've handled everything properly. Your father would be so proud of how you're honoring his memory. Focus on that beautiful tribute rather than worrying about tax complications that don't actually exist in your situation.

I'm so sorry for the loss of your father, Lily. What you're going through is incredibly difficult, and it's completely natural to feel overwhelmed by the tax implications on top of everything else. The great news is that you haven't made any mistakes at all. Memorial funds like yours are very common, and the IRS has clear guidance for these situations. What you've created is what tax professionals call a "temporary memorial fund" or "conduit arrangement" - essentially, you're just collecting donations temporarily and passing them through to their intended purposes. Here's what you should know to put your mind at ease: • The EIN was necessary for banking purposes, but it doesn't make your memorial fund a taxable business • Donations collected aren't considered your personal income or business income • Money distributed to the college for the scholarship won't create tax issues (since it's going to an established educational institution) • Funds used for legitimate funeral expenses are generally not taxable Since you're planning to distribute all the money and close the account, you most likely won't need to file any tax returns with that EIN. The IRS recognizes that temporary memorial funds serve a specific charitable purpose and aren't profit-making enterprises. My advice: Keep detailed records of every donation and distribution (photos of checks, receipts, etc.), but don't stress about complex tax filings. You're honoring your father's memory in a beautiful way, and that's what matters most. If you want absolute certainty, you could always contact the IRS directly or consult with a tax professional, but based on what you've described, you're handling everything perfectly.

I'm so deeply sorry for the loss of your father, Lily. Dealing with grief while trying to navigate unfamiliar tax territory is incredibly overwhelming, and your concerns are completely understandable. You absolutely did not make a mistake! What you've set up is exactly what thousands of families do every year - it's called a temporary memorial fund, and it's a recognized arrangement by the IRS. The banker was correct that you needed an EIN for the account, but this was purely for banking compliance, not because you were creating a taxable business entity. Here's what should give you peace of mind: • Your memorial fund is considered a "pass-through" or "conduit" arrangement - you're temporarily collecting donations to distribute for specific memorial purposes • The donations aren't taxable income to you personally or to the fund • Money going to the scholarship (through the college) won't create any tax complications • Funeral expense distributions are generally not considered taxable income • Since you're distributing everything and closing the account, you most likely won't need to file any tax returns with that EIN The most important thing is to keep good records - save copies of all donation checks, keep receipts for funeral expenses, and get documentation from the college for the scholarship portion. This protects you if any questions ever arise, though they rarely do for legitimate temporary memorial funds. Your father would be so proud of how thoughtfully you're honoring his memory. Please don't let tax worries diminish this beautiful tribute you've created. You're handling everything exactly right during an incredibly difficult time.