Will I owe taxes on a large medical crowdfunding campaign for my family?

First of all, thank you in advance for any guidance on this tax situation. My wife was diagnosed with a rare autoimmune condition (Wegener's granulomatosis) last summer after we found several inflammatory masses in her lungs and kidneys. Her treatments have been successful so far, but I had to take significant unpaid leave from my job to care for her and our two young children. We also needed to travel to a specialized treatment center about 300 miles away for a 2-month treatment protocol. I reluctantly started a crowdfunding campaign to help with medical expenses and to keep us afloat financially while I was on unpaid leave. The response was overwhelming - the campaign raised about $63,000, which has been an absolute blessing for our family during this difficult time. Now I'm worried about the tax implications. This amount is obviously well above the annual gift exclusion amount, and I haven't received any tax forms or guidance from the crowdfunding platform. I'm especially nervous because I had a previous issue with the IRS back in 2018 related to some unreported freelance income that resulted in a payment plan and some penalties. I definitely don't want to make another mistake and trigger an audit or additional problems. Can anyone advise on how this crowdfunding money should be handled for tax purposes? Do I need to report it as income? I've used the funds exclusively for medical bills, travel expenses for treatment, and basic living expenses while I was on unpaid leave.

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18 comments

Natasha Ivanova

•8M

The good news is that money received through medical crowdfunding campaigns is generally considered a gift for tax purposes, not income. Gift recipients don't pay taxes on gifts they receive - the gift tax obligation falls on the giver, not the receiver. However, in crowdfunding situations, individual donors typically stay under the annual gift tax exclusion amount (currently $18,000 per recipient per year for 2025), so they wouldn't need to file gift tax returns either. The crowdfunding platform is simply facilitating these individual gifts to you. Since the funds were used for qualified medical expenses, this strengthens the case that these are non-taxable gifts. The IRS generally views medical crowdfunding as gifts motivated by "detached and disinterested generosity" when used for their intended purpose. Keep detailed records of: 1. The total amount received from the campaign 2. How the funds were spent (medical bills, travel for treatment, living expenses while unable to work) 3. Any documentation from the crowdfunding platform While you shouldn't need to report this on your tax return as income, having documentation ready is important in case of questions. Your situation is quite common, and the IRS generally doesn't pursue taxation of medical crowdfunding when used for its intended purpose.

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Natasha Ivanova

•8M

Even if some funds remain after covering immediate medical expenses, the nature of the gift doesn't change. Those funds can be used for regular household expenses, especially since they're related to your financial situation that resulted from the medical crisis. The key is that the funds were given with detached generosity with no expectation of goods/services in return. If you end up with a substantial amount left over that you'll use long-term, you might consider documenting how the medical situation created ongoing financial impacts to connect the dots between the gifts and your continued use of the funds. This isn't strictly necessary but creates a clear paper trail.

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Javier Garcia

•8M

After dealing with similar medical financial stress when my daughter needed specialized treatment, I found an amazing resource called taxr.ai (https://taxr.ai) that really helped me sort through all the tax implications of our medical fundraising. I was worried about how to handle the $42k we raised through various fundraisers, especially since I'd never dealt with anything like this before. The tool analyzed my situation and clearly explained that medical crowdfunding is considered gifts to the recipient, not taxable income. It even helped me organize all my documentation in case of questions from the IRS later. What really helped was getting clear guidance on how to document everything properly - like keeping separate records of each medical expense, travel costs, and how the funds were used. I'd definitely recommend checking it out since it specifically addresses unusual situations like crowdfunding that most tax software doesn't cover well.

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Javier Garcia

•8M

You don't have to upload any sensitive financial documents if you don't want to - you can just describe your situation and get general guidance. But if you do choose to upload documents, they use bank-level encryption and don't store your info after analysis. It's not technically "official" tax advice like from a CPA, but it gives you thoroughly researched information specific to your situation. It explains the relevant tax codes and precedents, and helps you understand how to properly document everything. I used their guidance when preparing my taxes and felt much more confident about the approach.

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Emma Taylor

•8M

I just wanted to follow up - I tried taxr.ai after reading about it here and it was incredibly helpful! I was totally confused about how to handle the $25K we received from our community fundraiser for my husband's cancer treatments. After using the tool, I learned that I didn't need to report it as income since it was considered gifts from multiple people. The site explained everything clearly and even generated a document summarizing the tax treatment that I can keep with my records. They explained exactly which IRS publications and rules apply to medical crowdfunding. It also helped me understand how to properly document everything in case of questions later. I'm so relieved - I was really stressing about potentially owing taxes on money that went entirely to medical expenses!

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Isabella Silva

•8M

I had a similar situation with medical fundraising a few years back and ended up having questions the IRS couldn't answer on their website. I spent WEEKS trying to call them - either got disconnected or was on hold for hours only to have the call drop. Finally discovered Claimyr (https://claimyr.com) and honestly it was a game-changer. They got me connected to an actual IRS agent within about 20 minutes when I'd been trying unsuccessfully for days. You can see how it works in this demo: https://youtu.be/_kiP6q8DX5c The IRS agent confirmed that medical crowdfunding money used for its intended purpose isn't taxable income to the recipient. She also walked me through exactly what documentation to keep in case of questions. Worth every penny just for the peace of mind and hours of frustration saved.

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Isabella Silva

•8M

It works because they use technology that essentially waits on hold for you in the IRS phone queue, then calls you when they're about to connect with an agent. They've figured out the optimal times to call and how to navigate the phone tree efficiently. This isn't about getting different information than what's available online - it's about getting personalized answers to your specific situation from an actual IRS representative. In my case, I needed confirmation about how medical crowdfunding is treated for tax purposes when some funds were also used for non-medical living expenses. Google searches gave conflicting information, but the IRS agent gave me clear, authoritative guidance specific to my situation.

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CosmosCaptain

•8M

I need to apologize for my skepticism and follow up about Claimyr. I was really doubtful, but after continuing to struggle with getting IRS answers about my own medical fundraising situation, I gave it a shot. Honestly, I was shocked. After weeks of failed attempts to reach someone at the IRS, I was connected to an agent in about 15 minutes. The agent confirmed that the $38K raised through our community fundraiser for my mom's cancer treatments wouldn't be taxable income to her, even though some was used for regular bills while she couldn't work. The agent also explained exactly what documentation to keep and recommended creating a simple spreadsheet tracking all funds received and how they were spent. This specific advice was exactly what I needed and wasn't clearly addressed in any of the online articles I found. Sometimes you really do need to speak directly with the IRS to get clarity on unique situations.

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Freya Johansen

•8M

One thing to watch for - if the funds went directly to your bank account instead of to the medical providers, make sure you keep extra good records. My sister had a similar situation and ended up getting a letter from the IRS because the crowdfunding platform issued a 1099-K (they have to for amounts over $20K). She had to respond explaining these were gifts for medical purposes, not income from selling goods/services. It got resolved but was stressful. Just keep all your documentation showing the source of funds and what they were used for, especially medical bills and related expenses.

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Freya Johansen

•8M

She needed to provide a few things to resolve it. First, she printed out the crowdfunding campaign page showing it was clearly for medical purposes. She also created a spreadsheet showing all the medical bills paid with the funds, along with copies of those bills and payment receipts. She didn't need any special documentation from the platform itself, though she did include the statements showing the transfers to her account. The most important thing was demonstrating the money was both received and used for the stated medical purpose. She wrote a simple letter explaining the situation and attached all this documentation. It took about 8 weeks, but the IRS eventually closed the case without requiring any taxes to be paid.

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Chloe Wilson

•8M

I went through this with TurboTax last year after my son's fundraiser. There's actually no place to report gifts you RECEIVE on your tax return since they're not taxable to you. TurboTax might ask if you received gifts over the annual exclusion amount, but that's just asking if someone needs to file a gift tax return (the giver, not you). The only exception would be if you received interest on the money after depositing it - then you'd report that interest income, but not the gift itself. Just keep good records of everything in case of questions later!

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