Charitable giving represents an essential boost to organizations throughout our communities and, to those taxpayers who itemize, a significant tax deduction.
Unfortunately, a growing number of Grinches are trying to take advantage of people being in the giving spirit. They create bogus charities, preying on your kindness to steal your money and your data for potential tax-related identity theft. It’s become such a problem that fake charities ranked #8 on the IRS’s Dirty Dozen list of the worst tax scams in 2023.
Protect yourself with these tips:
1. Learn the signs.Bogus charities may use official-sounding names or even “spoof” their caller I.D., so be sure to make your donations by contacting legitimate organizations directly. Beware of high-pressure tactics or requests to donate via a gift card or wire transfer. Take your time and do your research.
2. Donate to a qualified tax-exempt organization. Ask for the charity’s legal name, website, mailing address, and tax I.D. Cross-reference this information independently before you donate. If you itemize your taxes, this will ensure you can claim a deduction on your federal tax return for your gift. It’s also an excellent way to avoid fraudulent charities.
3. Work with an experienced tax advisor.Your CPA can help ensure you are making qualified donations to legitimate organizations. When in doubt, consult your advisor.
Stay safe this holiday season, and make sure your generosity reaches those who truly need it.
Are you seeking a tax advisor to guide you in charitable giving? Schedule a call with the team at TFW Advisors® today!