Hi,

I am doing a fundraiser for a dear friend who is very sick and in need of healthcare. I have set up a fundraiser on line. I need to set up an account that the funds raised will go into. I went to the bank thinking that I could set up an interest free cking account with Title "my friends name healthcare fund" and my name below it and me as a signer.. They said I would have to set up a business account if I wanted to name the account.. which then would have interest…. Unless I got a certain # from the state that would then wave interest and taxes.

We are raising 50,000. My husband suggested that I then go to the bank with my friend and she open the account and put me on as a signer. That way when she files for taxes she would not be required to pay as she is unable to work and her income will not exceed the 50,000 obviously. My friend has some very bad days with her illness.. but she is well enough to take a trip to the bank but I had originally thought the less she has to do right now would take another worry off her shoulders.

What is the best way to set up a fundraiser account where there is not interest and taxes for anyone on the money?

Thank you very much

The best way is to apply for 501(c) status for fundraiser. How did you set up the fundraiser online?

I would suggest that you and she go to her bank.
Setting up a 501 c 3 is done through the IRS and isn't too hard, but it isn't easy either.
If she is going to be needing every penny for care and basic daily living, she really doesn't need a special fund. A tax preparer can help her not pay taxes on the gift income.

You cannot claim 501(c)(3) status when setting up an account for a private fundraiser to benefit an individual like this. All donations to this are considered to be gifts by the donors, not charitable contributions. As such, checks should be made out to the indivdual herself. Alternatively, you can set up a corporation using the title you suggested,and apply for a tax identification number from the IRS, but that requires time, expense, and expertise you may not have, plus filing of tax returns by the corporation. One suggestion: there are web-based services to manage individual fundraisers like this - you may want to look into GiveForward: The #1 Way to Raise Money for a Loved One , for example. I can't vouch for this service, as my only experience with it is having made a gift myself to a fund raiser for an individual. One advantage is it allows gifts to be made by credit card.

Regarding taxes: the person receiving these gifts has no tax obligation whatsoever. The donors making gifts also have no tax obligations unless they exceed the annual gift tax exclusion amount of $14,000.