- Urgent Appeals
- Tips to Avoid Scams & ID Theft
- Tax Documentation of Cash Contributions
Whenever there is a disaster such as the recent hurricanes, the lowlifes show up and try to scam generous individuals out of money intended to go to victims of the disaster. Don’t you be another victim of the disaster – watch out for scammers claiming to represent charitable organizations who will pocket the donations for themselves instead. Besides fraudsters soliciting on behalf of bogus charities, some so-called charities aren’t entirely honest about how they use contributions.
You may receive phone calls, emails, snail mail, or appeals on social networking sites for donations to help the victims of the recent hurricanes; some of these appeals may be coming from fraudsters and not legitimate charities. Unfortunately, this happens often after natural disasters such as earthquakes and floods.
So before writing a check or giving your credit card number to a charity that you aren’t familiar with, check them out so you can be assured that your donation will end up in the right hands. Follow these tips make sure that your charitable contributions will actually go to the cause you are supporting:
- Donate to charities that you know and trust. Be alert for charities that seem to have sprung up overnight in connection with current events.
- Ask if a caller is a paid fundraiser, who he/she works for, and what percentages of your donation go to the charity and to the fundraiser. If you don’t get clear answers – or if you don’t like the answers you get – consider donating to a different organization.
- Don’t give out personal or financial information – such as your credit card or bank account number – unless you know for sure that the charity is reputable.
- Never send cash. You can’t be sure that the organization will receive your donation, and you won’t have a record for tax purposes.
- Never wire money to someone who claims to be from a charity. Scammers often request donations to be wired because wiring money is like sending cash: once you send it, you can’t get it back.
- If a donation request comes from a charity that claims to help a local community group (for example, police or firefighters), ask members of that group if they have heard of the charity and if it is actually providing financial support.
- Check out the charity’s reputation online using Charity Watch, or other online watchdogs.
Contributions you make to legitimate charities may be tax-deductible, but only if the donations are to religious, charitable, scientific, educational, literary, or other institutions that are incorporated or recognized as organizations by the IRS. These organizations are sometimes referred to as 501(c)(3) organizations (after the code section that allows them to be tax-exempt). Gifts to federal, state, or local government; qualifying veterans’ or fraternal organizations; and certain nonprofit cemetery companies may also be deductible. Gifts to other kinds of nonprofits, such as business leagues, social clubs, and homeowner’s associations, as well as gifts to individuals cannot be deducted.
To claim a cash contribution, you must be able to document that contribution with a bank record, a receipt, or a written communication from the qualified organization; this record must include the name of the qualified organization and the date and amount of the contribution. Valid types of bank records include canceled checks, bank or credit union statements, and credit card statements. In addition, to deduct a contribution of $250 or more, you must have an acknowledgment of your contribution from the qualified organization; you’ll also need certain payroll deduction records instead if you made your donation through work.
Be aware that you must also itemize your deductions to claim a charitable contribution. It may also be beneficial for you to group your deductions in a single year and then skip deductions in the next year. Please contact this office if you have questions related to the tax benefits associated with charitable giving for your particular tax situation.