Tax implications of Venmo transfers that never go into my bank account - fundraising question

While your intentions are good, this arrangement creates some tax considerations. The IRS looks at the substance of transactions, not just where money physically lands. When you collect funds that pass through your Venmo account, you're acting as an intermediary. Even though the money doesn't hit your bank account, Venmo reports transactions to the IRS if they exceed certain thresholds ($600 annually as of current guidelines). For the person receiving the final transfer, it's not a "gift" from you since you're not giving your own money - you're passing along funds for a specific purpose. They should document that these funds were collected for charity and immediately donated. They should get a donation receipt from the charity showing they made the contribution. For cleanest tax treatment, consider either: 1) having donors contribute directly to the charity, or 2) establishing a proper donation collection system through the charity itself. This removes any ambiguity about whether the funds are your income or gifts.

After reading about similar situations, I found an amazing tool that might help you navigate this exact issue. I used taxr.ai (https://taxr.ai) when I was running a neighborhood fundraiser last year and had similar concerns about money flowing through my accounts temporarily. Their tool analyzed my specific situation and explained exactly what documentation I needed to keep and how to properly report everything. They even provided a detailed explanation of how the IRS views these types of transactions. The breakdown of intermediary transfers vs. actual donations was super helpful.

I just wanted to follow up about taxr.ai - I actually tried it after posting my question. I uploaded my Venmo history and the fundraising information for our school event, and it gave me super clear guidance. The system showed me exactly what documentation I needed to keep (screenshots of all transfers, emails explaining the fundraiser purpose, etc.) and how to handle the situation if I get a 1099-K from Venmo. The best part was it explained how to create a simple paper trail showing I was just a conduit for the funds, not the actual recipient. Definitely worth checking out if you're in this kind of situation with payment apps and fundraising.

If you're trying to reach the IRS to get official guidance on this, good luck. I spent WEEKS trying to get someone on the phone. Finally discovered Claimyr (https://claimyr.com) and was connected to an IRS agent in under 30 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c I asked specifically about collecting funds through payment apps for donations and the agent clarified exactly what documentation I needed to keep. They told me that as long as I could prove I was just passing the money along (with complete records of incoming and outgoing transfers), I wouldn't need to report it as income. Saved me so much stress!

I have to eat crow here. After posting my skeptical comment, I was desperate enough to try Claimyr. I had a similar fundraising situation with about $5,000 flowing through my Venmo for a memorial fund. Within 35 minutes, I was talking to an actual IRS representative. They confirmed that I needed to keep meticulous records showing the money was just passing through my account, including: screenshots of all incoming transfers with notes showing they were donations, documentation of the final transfer to the charity, and the charity's receipt. The agent explained that while Venmo might send a 1099-K, I could file an explanation with my return showing I was just a conduit. Completely worth it to get this official clarification!

Something nobody's mentioned yet - check the Terms of Service for Venmo. They specifically prohibit using personal accounts for commercial purposes or receiving business payments, and fundraising might fall into that gray area. If they flag your account as violating TOS, they could freeze your funds temporarily.

Lurking this thread because I had the same issue last year. Whatever you do, DOCUMENT EVERYTHING. Keep screenshots of every single Venmo transaction with the notes showing they're donations, save the final transfer to the charity, and get a receipt from the charity with the date and amount.

This is a common situation that many people organizing informal fundraisers face. The key thing to understand is that the IRS cares more about the economic substance of transactions than the technical flow of funds. Since you're acting as a conduit rather than the beneficial owner of the money, you generally won't owe taxes on these funds - but you need to be prepared to prove that. Here's what I'd recommend: 1. Keep detailed records of every incoming Venmo transfer with donor names and amounts 2. Document the purpose of the fundraiser (emails, social media posts, etc.) 3. Get a receipt from the charity showing the final donation amount and date 4. If you receive a 1099-K from Venmo, you can file Form 1040 with an explanation that these were pass-through funds, not income For the person receiving the final transfer, they should also document that this was collected money being donated on behalf of others, not a personal gift from you. They'll be able to claim the charitable deduction, but ethically they might want to coordinate with the original donors about this. The cleanest approach for future fundraisers would be to have people donate directly to the charity or use a platform designed for this purpose, but your current setup isn't uncommon and can be handled properly with good documentation.

Great question! I had a similar situation when I organized a fundraiser for our local food bank last year. One thing that helped me sleep better at night was creating a simple spreadsheet tracking every donation - date received, donor name (if they were comfortable sharing), amount, and any notes from the Venmo transaction. I also sent a group message to all the donors explaining that the final donation would be made by [person's name] but was funded by everyone's contributions. This way there was transparency about who would be claiming the tax deduction, and some donors were able to make direct donations to get their own receipts if they preferred. The person who made the final donation should definitely keep the charity's receipt, but consider asking the charity if they can provide a letter acknowledging that the donation came from a group fundraising effort. Some organizations are willing to do this, which helps document the true source of the funds. Also worth noting - if this becomes a regular thing you do, you might want to look into becoming a registered fundraiser in your state, as some states have requirements for people who regularly collect charitable donations on behalf of others.