IRS Warns About Fake Charities; How To Check Before Donating
The Internal Revenue Service (IRS) has issued a warning to taxpayers about the prevalence and dangers of fake charity scams. These scams are designed to exploit the generosity and compassion of donors, especially after major disasters or crises, such as earthquakes, wildfires, or pandemics. However, instead of helping the victims or causes that they claim to support, these scams divert the donations to the pockets of the scammers, leaving the donors with no tax benefits and no satisfaction.
The IRS advises taxpayers to be careful and vigilant when they decide to donate to a charity. They should verify the legitimacy and credibility of the charity before making any payment, and they should keep records of their donations for tax purposes. They should also report any suspicious or fraudulent activity to the authorities.
How To Protect Yourself From Fake Charity Scams
Here are some tips from the IRS on how to protect yourself from fake charity scams and donate wisely:
Verify the charity’s name, website, and mailing address
Many fake charities use names that sound similar or identical to well-known and reputable charities, such as the American Red Cross, the Salvation Army, or the United Way. They may also use fake websites or addresses that look like the real ones. To avoid confusion and deception, you should check the exact name, website, and address of the charity that you want to donate to. You can use the Tax-Exempt Organization Search (TEOS) tool on IRS.gov to check if an organization is a qualified tax-exempt charity that can receive deductible donations. You can also use other sources, such as the Better Business Bureau, Charity Watch, or Charity Navigator, to check the ratings and reviews of the charity.
Don’t give in to pressure
Many fake charities use high-pressure tactics to persuade donors to make an immediate payment, either by phone, email, or text. They may also use emotional appeals, such as stories of suffering or urgency, to manipulate donors. They may also ask for personal or financial information, such as your Social Security number, bank account number, or credit card number, which they can use to steal your identity or money. Legitimate charities do not operate this way and are happy to receive donations at any time. They also respect your privacy and security and do not ask for unnecessary or sensitive information. You should never feel pressured or rushed to donate, and you should always do your research before giving.
Be wary of how you pay
Many fake charities ask for donations by using gift cards, wire transfers, or cash. These methods are hard to trace and recover, and they do not provide any proof of your donation. It is safer and smarter to pay by credit card or check, and only after verifying that the charity is real. You should also make sure that the payment is made directly to the charity and not to a third party or an individual. You should also avoid clicking on any links or attachments in emails or texts that claim to be from a charity, as they may contain malware or viruses that can harm your computer or device.
Keep records of your donations
You should obtain a receipt or acknowledgment from the charity that shows the amount and date of your donation, as well as the charity’s name and address. You will need this information to claim a tax deduction on your federal tax return if you itemize deductions. You should also keep a copy of your bank statement, credit card statement, or canceled check that shows the payment to the charity. You should also be aware of the rules and limitations for charitable deductions, such as the percentage of your income that you can deduct, the types of donations that are deductible, and the documentation that you need to provide. You can find more information on IRS.gov or consult a tax professional.
Report any suspicious or fraudulent activity
If you encounter a fake or questionable charity, you should report it to the FBI’s resources on Charity and Disaster Fraud. You can also file a complaint with the Federal Trade Commission (FTC) or your state’s attorney general. You should provide as much information as possible, such as the name, website, address, phone number, and email of the charity, the amount and method of your donation, and any communication or correspondence that you had with the charity. By reporting the scam, you can help prevent other donors from falling victim to it and help the authorities to stop it.
In conclusion, by following these tips, you can ensure that your donations go to legitimate and worthy causes and that you can benefit from the tax advantages of charitable giving. You can also avoid becoming a victim of identity theft or fraud, which can cause you financial and emotional distress. Remember, not all charities are created equal, so do your homework before you donate.
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Frequently Asked Questions
1. How can I find out if a charity is qualified to receive deductible donations?
You can use the Tax-Exempt Organization Search (TEOS) tool on IRS.gov to check if an organization is a qualified tax-exempt charity. You can also use other sources, such as the Better Business Bureau, Charity Watch, or Charity Navigator, to check the ratings and reviews of the charity.
2. How much can I deduct for my charitable donations?
The amount that you can deduct for your charitable donations depends on several factors, such as your income, the type of donation, the type of charity, and the documentation that you provide. Generally, you can deduct up to 60% of your adjusted gross income (AGI) for cash donations to public charities, and up to 30% of your AGI for non-cash donations to public charities. You can find more information on IRS.gov or consult a tax professional.
3. What should I do if I receive a phone call or an email from a charity asking for a donation?
You should be cautious and verify the identity and legitimacy of the charity before making any payment. You should not give out any personal or financial information, such as your Social Security number, bank account number, or credit card number, over the phone or email. You should also not click on any links or attachments in emails or texts that claim to be from a charity, as they may contain malware or viruses. You should ask for the charity’s name, website, address, and phone number, and check them against the TEOS tool or other sources. You should also ask for a receipt or acknowledgment of your donation.
4. How can I report a fake or questionable charity?
You can report a fake or questionable charity to the FBI’s resources on Charity and Disaster Fraud. You can also file a complaint with the Federal Trade Commission (FTC) or your state’s attorney general. You should provide as much information as possible, such as the name, website, address, phone number, and email of the charity, the amount and method of your donation, and any communication or correspondence that you had with the charity.
