volunteerAmericans who donated to charities last year anticipating a tax write-off need to check those charities for legitimacy before filing. Thousands of taxpayers are claiming a charitable donation to the Hurricane Sandy victims and learning that the charities did not have approval from the IRS to be a 501(c)(3) charitable organization. Unfortunately, if the charity doesn’t have the approval then you can’t deduct donations made to these organizations. The IRS can disallow the deduction and charge penalties and interest on the taxes due if you claim such a deduction.   

Recently, allegations have been made in a civil suit that was filed against the Hurricane Sandy Relief Foundation. The complaint filed in the case by the New Jersey Division of Consumer Affairs alleges the charity took in donations claiming they would be tax deductible when in fact the charity did not have its 501(c)(3) status.  

Also, when you give directly to a person or family, you CANNOT claim a tax deduction for that donation. This is why you are directed to give to a specific (hopefully, an IRS-qualified) charity, which will then route the funds to the appropriate individuals.  

Some “charities” are sadly just scams while others simply never receive the proper approval from the IRS to become a 501(c)(3) charitable organization. It is advised by Liberty Tax® to check with the IRS to see if an organization you made donations to is eligible to receive tax-deductible contributions. Simply visit the IRS website and search the charity’s name. It’s also advised to do this before you claim the deduction.  

With all the negative light, try not to forget that we give to help those who are less fortunate and who desperately need their fellow Americans. A tax break (or not) shouldn’t alter that unselfish act.