Teacher raised $41,000 to help local families hurt by COVID-19. He now owes $16,000 in taxes.
Louis Goffinet, a 27-year-old teacher in Connecticut, said he started a fundraiser a year ago to aid local families affected by the coronavirus pandemic. The campaign was a smashing success, collecting more than $41,000 to help them pay for groceries, meals and rental assistance.
But Goffinet said he recently learned of a downside to his efforts: He now owes $16,031 in personal income tax on the funds he raised via Facebook Fundraisers.
"After consulting with several tax professionals, the unanimous consensus seems to be that I am responsible for paying income tax on the funds I was able to raise through Facebook," Goffinet wrote in a Facebook post.
In his April 10 post, Goffinet is again turning to charity — this time to cover his own tax bill. "This is more than I can reasonably afford to pay alone, and am asking for the community's help," he wrote.
In an interview with CBS MoneyWatch, Goffinet said he was in "genuine shock" after getting the tax form.
"I had spent the better part of my 2020 devoting my weekends and free time to volunteering and helping the community," he said. "It was a powerful thing to be part of it. But then to be told not just by the 1099-K, but to be told by tax professionals that I do owe taxes on funds I raised for my community, it didn't feel right."
Goffinet said he raised funds through two Facebook fundraisers, one to assist local families with groceries and the other aimed at providing financial help over the holidays. He didn't create an IRS-approved charity, but instead deposited the funds in his bank account and then spent the money on whatever local families needed, he told the Hartford Courant, which earlier reported on his predicament.
Goffinet told CBS MoneyWatch that he's concerned his experience may send the wrong message to other would-be volunteers and samaritans.
"Part of the message people are seeing now is it's not worth it to help others because you will only set yourself up for a really tough situation," he said. But, he added, he plans to continue his efforts in some way.
"This is probably the most rewarding thing I've done," Goffinet said.
Facebook said that it's unable to provide tax advice to people who use the platform to raise funds because individual situations can vary and the tax code can change from year to year.
Pitfalls of donating via Facebook
The 8th-grade math and science teacher said he organized two fundraisers: One at the start of the pandemic, which helped pay for groceries for community members in need, and another in November to help with holiday meals and gifts. He said he paid for 31 Thanksgiving dinners, and provided 20 gift cards for families to buy holiday gifts, on top of about 140 grocery store visits.
In early 2021, he received a 1099 form from Stripe, the payment processing company used by Facebook, stating that he would owe more than $16,000 on the fundraisers, he said.
Goffinet's tax bill is due May 17, the date of the extended filing deadline set by the IRS. The situation highlights the pitfalls of raising funds through online services such as Facebook, rather than donating money through an IRS-qualified charity.
Facebook cautions in its terms of service for personal fundraisers that it is "solely your responsibility to assess, collect, report or remit the correct tax, if any, to the appropriate tax authority." Donations made through personal fundraisers "generally are not tax-deductible under applicable law," the company notes.
Goffinet said Facebook should more explicitly state that raising money for a cause on the site could cause a tax liability.
"Especially in a circumstance like this, where a fundraiser is set up for a broader community and not one individual person's gain," he said. "I don't think it's clear enough to warn people like me that even if you are going to turn around and pass on all the money you raised, that there is still an income tax burden on that."
In the meantime, he said he has received some donations from people who want to help him pay his tax bill — including two offers from people who said they would cover the entire IRS bill once the final amount is certain.
"I would really encourage people who are considering something like this to go out and do it — and make sure you are well versed on the tax code," Goffinet added.