Like probably all of you out there, I have been fascinated by the tale of the bus monitor who was bullied. From what I understand, a collection fund was set up online for her, and it has taken in over $600,000 for the lady.I was wondering...does she have to pay any taxes on the money that has been donated to her? I don't know if it's even been distributed to her yet, but assuming it does reach her, I find it interesting to contemplate what her obligation to the IRS will be.
I was wondering...does she have to pay any taxes on the money that has been donated to her?There's an interesting ongoing discussion of this very issue on misc.taxes.moderated, which you can access through Google groups if your ISP doesn't have a Usenet feed. I've pretty well settled into the "these are gifts" camp, and as we all know, gifts aren't taxable income to the recipient.But what if they aren't considered gifts? And what determines whether they are? Well, it's our old friend facts and circumstances. (Yeah, there's a Supreme Court case for that.)PhilRule Your Retirement Home Fool
Thanks, Phil. I've always wondered about things like that too. Where I live we often have benefits for people struck by diasater or serious illness. I always thought they were gifts but wondered what the IRS position was.In some cases there is another issue though. A man I know suffered a heart attack followed by multiple strokes during recovery from quintuple bypass. At 53 he was never going to be able to live at home again but was otherwise healthy. Friends raised over $50K for the family and the man became a permanent resident of the local veterans home after several months in a private rehab facility. The family was advised by their attorney to get the $50K out of Illinois ASAP. His daughter, in the military based in DC, took the money and sends her mother back here what she needs. (Or she did. I doubt there is anything left after more than 15 years.) The important thing here is the attorney was worried the state would try to claim the money as reimbursement of medicaid they had paid before he went to the vets home.Mixed feelings on that issue. I understand the state wanting to recover their expense but I also know the family had huge personal outlays beyond insurance that they couldn't afford during his treatment. Always easy to say just cut spending or throw them off medicaid until you know them personally.
Always easy to say just cut spending or throw them off medicaid until you know them personally. That is for sure. I know someone who is an orphan (mother murdered when she was 10, father died of cancer soon after, raised by schizophrenic grandmother who abused her for a while, etc.). She is now 21 and pretty much homeless. Psychologically extremely messed up. I am not a relative and am not legally required to contribute to her support. I contribute some, however, to the limit of my ability. Situation actually more complicated than this. I wish I could take her off my taxes, but I cannot. I contribute nowhere near half of what her expenses are. She has great difficulty getting a job and in keeping one because of her mental problems. And such jobs as she has pay too little to live on anyway.It is easy to say such a person should get off Medicaid, get a job, etc. But some people cannot do this. It is heart breaking to know someone in a situation like this.
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