The IRS has reminded taxpayers to be careful when making charitable donations because scams can lead to financial loss and incorrect tax deductions. The agency said scammers often create fake charities, especially after disasters or other tragic events, to collect money and personal information. Before making a donation, taxpayers should use the Tax Exempt Organization Search tool on IRS.gov to make sure the charity is qualified. In general, taxpayers who itemize deductions may claim a deduction for eligible charitable donations. However, some taxpayers who do not itemize may also qualify to deduct certain cash contributions under current tax rules. In addition, donations made directly to individuals or personal fundraising campaigns are generally not tax deductible. Taxpayers should also keep receipts and other records for every donation they make.
The IRS also warned taxpayers to be careful of noncash donation schemes that use inflated appraisals or overstated property values to claim larger tax deductions. Taxpayers should keep accurate records, determine the fair market value of donated property and avoid anyone who promises to eliminate or greatly reduce their tax bill through these arrangements. Moreover, taxpayers and tax professionals can confidentially report suspected tax scams to the IRS online. Taxpayers who believe their identity has been stolen should use the IRS identity theft resources for assistance. Finally, the IRS advised taxpayers to verify charities before donating, keep complete records and stay alert to scams so they can protect both their money and the tax benefits they are entitled to.
