Things can get even more complicated if you're donating to international relief efforts and plan to claim your gift as a tax deduction.
Sometimes, like today, it seems as if the whole world is totally out of control. In the past few weeks, we've seen earthquakes in Afghanistan and Morocco, floods in Libya, a category 5 Pacific hurricane hit Mexico, hostilities in the Middle East.
The losses of lives and property is stunning.
The one positive of all these tragedies is that people worldwide want to help. But unfortunately, crooks are looking to take advantage of people's goodwill.
Everyone who gives to any cause wants their donations to go to those in need. That's why you need to carefully check out any group soliciting donations.
Such vetting is particularly true for U.S. donors who plan to deduct their gifts. In these cases, it's critical to know how to give to international causes in ways that are approved by the Internal Revenue Service.
Vetting charitable groups: "We all want to help innocent victims and their families. Knowing we're trying to aid those who are suffering, criminals crawl out of the woodwork to prey on those most vulnerable – people who simply want to help," said IRS Commissioner Danny Werfel in a recent agency warning about fake charities.
If you're approached by, either via phone, mail, email, or in person, the first thing to do is pause. Don't feel pressured to immediately give to a charity, especially one with which you're unfamiliar.
The IRS notes that criminals commonly set up bogus charities to take advantage of the public's generosity during international crises or natural disasters.
Typically, they seek money and personal information. The cash they take immediately. The personal data they use to steal identities and additional assets.
Fake charity promoters may use emails, fake websites, or alter or "spoof" caller ID to make it look like a real charity is calling to solicit donations. Criminals often target seniors and groups with limited English proficiency.
If you're contacted by a charity that you've never heard of, take these steps.
- Verify first. Scammers frequently use names that sound like well-known charities to confuse people. Potential donors should ask the fundraiser for the charity's exact name, website, and mailing address so they can independently confirm the information. Use the IRS' online Tax-Exempt Organization Search (TEOS) to verify if an organization is a legitimate tax-exempt charity. You also can use private philanthropy trackers, like those provided by Candid/GuideStar and Charity Navigator, before making any donations.
- Don't give in to pressure. Scammers often pressure people into making an immediate payment. In contrast, legitimate charities are happy to get a donation at any time. Donors should not feel rushed.
- Don't give more than needed. Crooks are on the hunt for both money and personal information. Taxpayers should treat personal information like cash. Don't hand it out to just anyone.
- Be wary about how a donation is requested. Never work with charities that ask for donations by giving numbers from a gift card or by wiring money. That's a scam, warns the IRS. It's safest to pay by credit card or check, and then only after verifying the charity is real.
My aptly named post Don't fall for disaster charity scams, published last year following Hurricane Ian's lashing of Florida, has more on how to avoid being a charity con victim, as well as tips to ensure that your gifts really do go to disaster victims, and not into the pockets of crooks.
International giving tips: In these global times, many of us have friends or family in other parts of the world. When tragedy strikes them, it truly does feel close to home.
International donations, however, require extra attention, especially if you plan to claim the gifts as a U.S. tax deduction.
First, note that U.S. tax law does not allow for deduction of direct contributions to foreign-based charities. This IRS position has been upheld in courts.
After a gigantic typhoon slammed the Philippines in 2013, I cited in a post about donations to international charities a background paper prepared by audit, tax and consulting giant PricewaterhouseCoopers (PwC) on U.S. Tax Court rulings in two separate foreign donation/deduction cases.
The bottom-line in both cases is that gifts to a charity created or organized under foreign law are not deductible for U.S. income tax purposes.
U.S. charitable groups with global reach: There is, however, deductible work-around.
Consider giving to an IRS-approved U.S. organization with tax-exempt status and which has a special fund designated for overseas relief efforts.
It's not too hard to find such groups. In most cases, they even let you direct your money to the stricken areas outside U.S. borders.
Here are eight U.S. organizations that are dedicating funds to international hurricane and/or earthquake relief efforts:
- World Vision
- Global Giving
- Oxfam America
- World Central Kitchen
- United Nations World Food Program USA
When you give to them to support international relief efforts, you'll be able to deduct that gift on your tax return since it goes to the domestically-based charity.
Remember, too, that regardless of the legitimate group that gets your gift, the usual donation and deduction rules apply. You can find more on them in my post 6 tax donation deduction tips.
You also might find these items of interest:
- Volunteer time is not deductible, but some expenses might be
- 5 tax-smart alternative ways for cool cats to contribute to charities
- Storm Warnings: Preparing for, recovering from, and helping those affected by natural disasters
- More disasters mean more catastrophe-related scams, including charitable tax donation deduction ploys
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