My friend's daughter was diagnosed with schleroderma when she was 10-years-old. Now she is "almost 13" and the doctors are recommending some laser treatment at MD Anderson. Insurance has thus far denied coverage, but even if the hospital is able to get them to cover the treatment, the copays are very expensive in this case and the treatments will go for months in a town far from home... that all adds up to big costs.
A number of her friends and I are wanting to set up a bank account and make a web site with a way for people to donate money for the girl's treatments. Today, I got a "doing business as" name and opened a bank account under that name. The girl's parents' names are also on the account. And, I obtained an EIN from the IRS website.
Can anyone tell me what category the IRS considers this money for the girl's family? Do they have to pay taxes on it? My name is on the account, too, since I set it up, but I will not ever withdraw money or write checks from it. Do I have to report anything to the irs?
I spent an hour on the phone with the IRS trying to ask them for help, was transferred five times with 15 minute waits following each transfer to no avail. In the end, I was told to refer to a very lengthy online document to discern for myself what kind of income this is for the family. I told him that I would not have confidence that what I decided was correct since I am not a CPA, but he insisted that the IRS had no one who could or would help me figure it out. Grr.... I guess they just want me to waste some money that should be spent on medical treatments by hiring a CPA to set this up for us.
Can anyone help me figure this out? Can we use the scleroderma foundation in any way to keep the parents from having to pay taxes on the donations. If they have to pay taxes, basically 1/3 of every dollar donated is going to Uncle Sam. That flat doesn't seem right.
Thank you for any and all help and suggestions!