Will I have to pay taxes on this?

[glowdotGlock]

I found out today that a former classmate was found murdered in his home in Lewisburg today. I went to the bank to set up a memorial fund for his family. I was told that I have to get an EIN (employer ID number) from the IRS. She instructed me how to do so. I got on the IRS website and applied and instantly got my EID. Now I take that number to the bank tomorrow and give them the number and set up the account and I'm good to go. My question is will I have to pay any taxes on this or do my taxes different for this year?

[Oh Shoot]

EIN is all about employee withholding taxes, not sure why you needed one, but then I don't know anything about memorial funds -- do you have to incorporate or something to do a legal memorial fund is only thing I can think of?

 

I had to get an EIN, or at least it was strongly suggested by my tax person, when I started a sole proprietorship back when, but it never came into play because I never hired an employee.

 

I did issue a 1099-MISC a few times for outside services I paid that was billed to a client, maybe I needed an EIN to do that legally, can't remember.

 

- OS

Edited July 30, 2013 by Oh Shoot

[Raoul]

I think the problem here is that bank accounts have to be linked to some identifier, i.e SSN or EIN.

There' is probably some dollar amount threshold where reporting is required. So you will expend all you take in and will not have to pay taxes. But I bet you have to file.

 

No good deed.....

[Guest Lester Weevils]

Sounds worth the price of questioning a CPA, but maybe some CPA would charge little or nothing for advice on a memorial fund?

 

Money paid to the family, wouldn't it need a 1099 filled out, so the family would be on the hook to pay taxes? Or is there some reason this income to the family could be tax free?

 

If a non-profit of some kind was not created, would this 1099 be reported on GlowDotGlock's personal income tax return? Yikes! On the other hand, if the income equals the outgo, then it shouldn't cost GlowDotGlock any extra tax? Time for a CPA.

[Raoul]

Sounds worth the price of questioning a CPA, but maybe some CPA would charge little or nothing for advice on a memorial fund?

 

Money paid to the family, wouldn't it need a 1099 filled out, so the family would be on the hook to pay taxes? Or is there some reason this income to the family could be tax free?

 

If a non-profit of some kind was not created, would this 1099 be reported on GlowDotGlock's personal income tax return? Yikes! On the other hand, if the income equals the outgo, then it shouldn't cost GlowDotGlock any extra tax? Time for a CPA.

 

Just the cost of a CPA to do it right. 

Gawd, I luv the IRS.

[Guest Lester Weevils]

Just the cost of a CPA to do it right. 

Gawd, I luv the IRS.

 

You could expense out the CPA and cost of the bank account and whatever else incidental expenses, send the family a check minus expenses? So there is exactly zero profit or loss.

 

A gunny sack full of dollar bills would be a lot simpler!

 

I don't recall turbotax ever asking questions about this kind of situation. :)

Edited July 29, 2013 by Lester Weevils

[austin7.62]

Sorry about your buddy. That is an awesome thing you are doing for his family!

[Dustbuster]

way to go gdg,nice to have that set up hopefully one of the cpa's on here can help

[glowdotGlock]

Thanks guys. I wasn't sure. I don't know much about this stuff because I work for "The Man". I did think about just taki g cash donations but thought that may be a little risky. This way anyone can go buy the bank and give cash or check even at night with the deposit box.

A little more info about my classmte..
He is my age (27-28). I see him around town here and there. He was found murdered in his appartment today. Reports I have heard say he had been im tjere a few days. I'm still trying to get details.

2 murders in my small little hometown this week.

[Guest Lester Weevils]

My condolences GlowDotGlock, and you are doing a good (complicated) thing.

[glowdotGlock]

Thank you. Sorry about the above spelling. I'm on my phone.

[monkeylizard]

I'm pretty sure distributions from a memorial fund count as a gift to the surviving heirs and is not taxable income to them. Donations to the fund are not tax-deductible for the giver since it's not an official non-profit organization. Your bank that set it up should be able to tell you that.

Edited July 30, 2013 by monkeylizard

[billyscott]

My condolences to you and your friend. It's a very good thing you are doing. 

Your bank should be able to answer your questions. Just find the right person to talk to.

Sorry to see this going on in Lewisburg. When I was a kid, in the 60's, I lived in Shelbyville

and Lewisburg was like my second town.