Helping Someone in Need: Gifts, Trusts, and Tax Rules

Helping someone in need involves two bodies of law most people never think about until they’re mid-gesture: liability rules for stepping in during an emergency, and tax rules for moving money to another person. Federal law is generous on both fronts. Good-faith rescuers are broadly protected, and the tax code offers several ways to give substantial help without triggering tax for either side. But there are hard edges. A cash gift above $19,000 to any one person in 2026 requires a federal filing, gifts to individuals are never tax-deductible, and a well-meaning transfer can knock a disabled recipient off benefits they rely on. State rules fill in some of the gaps, so treat what follows as the federal framework.

If You Step In During an Emergency

Every state has a Good Samaritan law that shields bystanders who help during a medical emergency. The common thread: if you act in good faith, expect no payment, and provide care that’s reasonable given your training, you aren’t liable for unintentional harm. Imperfect CPR is protected. Recklessly ignoring an obvious risk, or doing something wildly outside what the situation calls for, can strip the protection away.

Federal law adds a second layer for organized volunteering. Under the Volunteer Protection Act, if you volunteer through a nonprofit or government entity, you’re shielded from liability for harm caused within the scope of your duties, unless you were grossly negligent, engaged in criminal conduct, or operating a vehicle that requires a license or insurance.¹ This supplements, not replaces, state Good Samaritan protections.

The practical rule is simple. Help. The legal system heavily favors people who try. Where rescuers get into trouble is when they push past what the emergency requires, or keep intervening after trained professionals arrive. When paramedics take over, step back.

Cash Gifts and the $19,000 Rule

The most common way to help is also the most watched by the IRS. For 2026, you can give up to $19,000 per recipient in a calendar year without any reporting.² The limit is per person you give to, so you can give $19,000 each to as many different people as you want, and a married couple can jointly give $38,000 to a single recipient.

Exceed $19,000 for any one recipient and you have to file IRS Form 709. Filing doesn’t necessarily mean you owe tax. It draws down your lifetime exemption, which the One Big Beautiful Bill Act set permanently at $15,000,000 starting in 2026.² Most people never reach that ceiling, but the reporting duty still applies once you cross the annual figure.

Two things people commonly get wrong. The recipient of a gift owes no income tax on it.³ And giving money to an individual is not tax-deductible for you, no matter how sympathetic the situation. Keep records: what you gave, when, and to whom. If the IRS later questions whether a transfer was a gift or something else, documentation is your defense.

Paying Medical or Tuition Bills Directly

This is the most underused provision in the tax code for helping someone. Under Internal Revenue Code Section 2503(e), payments made directly to a medical provider or educational institution on someone’s behalf are completely exempt from gift tax, with no dollar cap.⁴ You can pay $200,000 of someone’s hospital bill or a year of private university tuition without filing anything or touching your lifetime exemption.

The condition is that the payment must go directly to the provider. Writing a check to your niece so she can pay her tuition doesn’t qualify. Writing the check to her university does. Same with medical costs: pay the hospital, the surgeon, or the insurance company directly.⁵ Reimbursing someone for a bill they already paid out of pocket doesn’t qualify, and the payment falls back under the $19,000 annual gift limit.

Qualifying medical expenses are broad, covering diagnosis, treatment, prevention, medical transportation, and health insurance premiums. If the person’s insurance later reimburses a cost you covered, the exclusion doesn’t apply to that reimbursed portion.⁵ On the education side, only tuition qualifies. Room, board, books, and supplies fall outside this unlimited exclusion, though they can still be given under the $19,000 annual amount.

Crowdfunding: Taxes and Benefits Risk

GoFundMe and similar platforms have become a default way to rally support, but the tax treatment is trickier than most organizers realize. When contributions are genuine gifts with nothing expected in return, the money generally isn’t taxable income to the recipient.⁶

The complication is the Form 1099-K. The reporting threshold reverted to $20,000 and 200 transactions under the One Big Beautiful Bill Act.⁷ If a platform issues a 1099-K for what were really gift proceeds, the IRS says to report the gross amount on Schedule 1, Line 8z, then offset it on Line 24z so the net effect on income is zero. Ignoring a 1099-K entirely invites follow-up.⁶

The bigger risk is what a fundraiser can do to the recipient’s benefits. If the person relies on Supplemental Security Income, Medicaid, or similar means-tested programs, a sudden influx of cash can push them past asset limits. SSI’s resource limit is just $2,000 for an individual.⁸ A $10,000 campaign can cost the recipient more in lost coverage than it delivers in help. Where benefits are in play, route the money through a Special Needs Trust or ABLE account before it ever hits the recipient’s bank account.

Helping Someone Who Receives Disability Benefits

Special Needs Trusts

A Special Needs Trust holds assets for a person with a disability without counting toward the resource limits governing SSI and Medicaid. SSI caps countable resources at $2,000 for an individual and $3,000 for a couple.⁹ Without a trust, even a modest inheritance or gift can disqualify someone from benefits they depend on.

The trust can pay for what government benefits don’t: specialized equipment, recreation, personal care attendants, home modifications. A third-party trust, funded by family or friends rather than by the disabled person, avoids Medicaid payback after the beneficiary’s death. Setup typically runs $2,000 to $6,000 in attorney fees plus court filing costs that vary by state. That’s modest compared to preserving ongoing eligibility.

ABLE Accounts

ABLE accounts are a simpler, lower-cost option for smaller amounts. Starting in 2026, the eligibility window expands: the beneficiary’s disability must have begun before age 46, up from age 26. Annual contributions are capped at $19,000 in 2026, matching the gift tax exclusion.¹⁰ Employed beneficiaries who don’t receive certain employer retirement contributions can add extra funds up to the lesser of their annual pay or the federal poverty level for their state.

Distributions are tax-free when used for qualified disability expenses, defined broadly to include housing, education, transportation, health and wellness, employment training, assistive technology, and personal support services.¹¹ Unlike a Special Needs Trust, an ABLE account doesn’t require an attorney to open. The tradeoff is the annual cap and the fact that remaining funds may be subject to Medicaid recovery after the beneficiary’s death.

Helping With Education Through a 529

A 529 plan lets you save for someone else’s education in a tax-advantaged account. Contributions grow tax-free, and withdrawals are tax-free when used for qualified education expenses like tuition, fees, books, and room and board.¹² You keep control of the account, which matters when helping a young person who might not manage a lump sum well.

For larger contributions, 529 rules let you front-load five years of annual gift exclusions into a single deposit. For 2026 that means up to $95,000 at once, or $190,000 for a married couple filing jointly, without a gift tax return, provided you make no additional gifts to that recipient during the five years. If the beneficiary doesn’t need the money for school, unused 529 funds can now be rolled into a Roth IRA in the beneficiary’s name, subject to a $35,000 lifetime cap and a requirement that the 529 has been open at least 15 years. The annual rollover is limited to the Roth contribution limit for the year, and the beneficiary needs earned income.

Lending Instead of Giving

A loan can feel cleaner than a gift, but the IRS has rules here too. Under Internal Revenue Code Section 7872, if you lend below the applicable federal rate, the IRS treats the forgone interest as a gift from you to the borrower. Small loans get a pass: loans of $10,000 or less between individuals are exempt, as long as the borrower doesn’t use the money to buy income-producing assets like stocks or rental property.¹³

For loans between $10,000 and $100,000, the imputed interest is capped at the borrower’s net investment income for the year. Above $100,000, that cap disappears and the full foregone interest is imputed.¹³ A $15,000 loan to a friend to cover a rough patch is unlikely to create anything. A $150,000 interest-free loan to a family member for a house can create real tax consequences on both sides. Put any significant loan in writing with clear repayment terms.

When Your Help Is Tax-Deductible

To make your giving reduce your tax bill, the money must go through a qualified charitable organization, not directly to a person. Internal Revenue Code Section 170 limits the deduction to contributions made to entities recognized under Section 501(c)(3).¹⁴ No matter how dire the situation, a personal check to an individual generates no deduction.

For 2026, the One Big Beautiful Bill Act made two changes. Non-itemizers can claim a universal charitable deduction of up to $1,000 for single filers and $2,000 for joint filers for cash gifts to public charities. Itemizers now face a 0.5% AGI floor, so only the portion of charitable contributions above 0.5% of your adjusted gross income is deductible. Cash contributions to public charities remain deductible up to 60% of AGI for itemizers, with unused amounts carrying forward for up to five years.

Any cash contribution of $250 or more requires a written acknowledgment from the receiving organization, stating the amount and whether the organization provided any goods or services in return.¹⁵ You need the letter in hand before you file. For smaller amounts, a bank statement or digital receipt is generally enough. Non-cash donations follow stricter rules; property gifts totaling more than $500 in a year require Form 8283, and individual items or groups of similar items above $5,000 need a qualified independent appraisal.¹⁶

1
Office of the Law Revision Counsel. 42 USC Ch 139 – Volunteer Protection
2
Internal Revenue Service. Whats New Estate and Gift Tax
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Internal Revenue Service. Frequently Asked Questions on Gift Taxes
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Office of the Law Revision Counsel. 26 USC 2503 – Taxable Gifts
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eCFR. 26 CFR 25.2503-6 – Exclusion for Certain Qualified Transfer for Tuition or Medical Expenses
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Internal Revenue Service. IRS Reminds Taxpayers of Important Tax Guidelines Involving Contributions and Distributions From Online Crowdfunding
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Internal Revenue Service. IRS Issues FAQs on Form 1099-K Threshold Under the One Big Beautiful Bill Dollar Limit Reverts to 20000
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Social Security Administration. Understanding Supplemental Security Income SSI Resources 2025 Edition
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Social Security Administration. Who Can Get SSI
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Social Security Administration. Spotlight on Achieving a Better Life Experience ABLE Accounts
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Internal Revenue Service. ABLE Accounts Can Help People With Disabilities Pay for Disability Related Expenses
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Internal Revenue Service. 529 Plans Questions and Answers
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Office of the Law Revision Counsel. 26 US Code 7872 – Treatment of Loans With Below-Market Interest Rates
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Office of the Law Revision Counsel. 26 US Code 170 – Charitable Etc Contributions and Gifts
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Office of the Law Revision Counsel. 26 US Code 170 – Charitable Etc Contributions and Gifts – Section 170 f 8
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Internal Revenue Service. Form 8283 Noncash Charitable Contributions