Taxes Blog

Finance Blogs » Taxes » Beware charity tax scams

Beware charity tax scams

By Kay Bell · Bankrate.com
Thursday, November 14, 2013
Posted: 4 pm ET

Donations from compassionate Americans are helping Filipinos as they struggle to recover from the devastation of Typhoon Haiyan.

Major U.S. charities such as the American Red Cross, Salvation Army, UNICEF and Save the Children have created special funds so that donor dollars get to the Philippines.

But other, newer groups also have cropped up seeking support for their efforts to help out the storm survivors.

Beware.

While some of these groups, many of which invoke Haiyan or the Philippines in their names, might indeed send the money you give to that Asian nation, others might be scams.

Unfortunately, many unscrupulous con artists use every catastrophe to take advantage of our desire to help those in dire circumstances. It happened after Hurricane Sandy and the Boston Marathon bombing.

It's happening now.

To avoid being a charitable scam victim, the Internal Revenue Service suggests that you:

  • Donate only to well-known charitable groups.
  • Be wary of charities with names that sound like nationally known organizations. Scam artists often use names that are similar, hoping that donors will think they are the real IRS-registered groups.
  • Check out any group before you give. The IRS' online search tool lets you see which groups have complied with federal 501(c)(3) requirements.
  • Never give your personal financial or tax information to any group soliciting a contribution. Legitimate charities won't ask for your Social Security number or financial account numbers and passwords.

Tax break for approved charities

The IRS recommendation that you verify any group's tax-exempt status also is key if you want to claim a tax deduction for your donation.

Only gifts to qualified 501(c)(3) groups are deductible as itemized deductions on Schedule A.

I know that a tax deduction is not why you are giving to the typhoon victims or any good cause. It's because you want to help those who are in need.

But if you do itemize deductions, then don't cheat yourself out of the tax break. Make sure both you and those who welcome your help will benefit.

***

Want the latest news on taxes, tax reform prospects, filing deadlines, political fights, Internal Revenue Service alerts and tax-saving tips? Subscribe to Bankrate's free Weekly Tax Tip newsletter.

You also can follow me on Twitter: @taxtweet.

Veteran contributing editor Kay Bell is the author of the book "The Truth About Paying Fewer Taxes" and co-author of the e-book "Future Millionaires' Guidebook."

«
»
Bankrate wants to hear from you and encourages comments. We ask that you stay on topic, respect other people's opinions, and avoid profanity, offensive statements, and illegal content. Please keep in mind that we reserve the right to (but are not obligated to) edit or delete your comments. Please avoid posting private or confidential information, and also keep in mind that anything you post may be disclosed, published, transmitted or reused.

By submitting a post, you agree to be bound by Bankrate's terms of use. Please refer to Bankrate's privacy policy for more information regarding Bankrate's privacy practices.