Natural Disasters, Charitable Giving and Scams

There have been numerous natural disasters around the world lately including hurricanes Harvey and Irma that have caused severe devastation in Texas and Florida as well as the islands of the Caribbean. Mexico has suffered two earthquakes in the past few weeks – the first registered 8.1 and was located off the Pacific coast and the most recent registered 7.1 and had its epicenter in the state of Puebla. The last earthquake was of particular interest to our family because our oldest son just arrived in Puebla Saturday night to begin serving a church mission there. I guess you could say he knows how to make an entrance! The good news for us is that he and the other missionaries in the area are all okay and accounted for. Many others in the area, and especially in Mexico City are not so fortunate.

Americans have always been known for being very charitable, especially on the heels of large natural disasters such as these. In 2016, Americans donated nearly $390 billion to charitable causes which represented a 4.2% increase over 2015 giving. Since hurricanes Harvey and Irma hit, Americans have donated over $300 million in hurricane relief.

Most Americans are careful to be sure the organization they donate to is legitimate and that nearly all their contributions are getting to the people that need the assistance. However, there are many others who fall prey to deceptive people and organizations that only seek to pad their own pocketbook rather than truly help those in need.

In order to avoid being scammed by fictitious groups masquerading as charitable organizations, I have listed here several steps to take to ensure your donation is used for the purpose intended.

  1. Try to always donate to a charitable organization with Internal Revenue Code section 501(c)(3) status. Organizations that have taken the steps necessary to attain this status are generally more apt to be above board and trustworthy. In addition, if you donate to a 501(c)(3) organization, your donation will be tax deductible for income tax purposes. These organizations should always provide you with an acknowledgement letter confirming your donation and providing their tax identification number (EIN).
  2. If you are unsure about the legitimacy of a charitable organization, perform your due diligence to confirm that they are actually who they say they are by searching the entity name and looking for indications that they might be a scam. Be suspicious of organizations that pop up in the wake of a natural disaster. Do extensive research about an organization you are unfamiliar with before donating to it.
  3. Keep a detailed record of all your charitable giving for tax purposes and for future reference.
  4. You can search for the name of an organization on the IRS website to ensure that they have attained section 501(c)(3) status by entering their employer identification number (EIN).
  5. Never donate cash. Send a check and try to avoid using your credit or debit card or providing your bank account information.

Having provided all the cautions above, please continue to be charitable and to serve others as that is the source of the greatest happiness in this life in my opinion.

Regarding tax deadlines, we just passed the 2016 business extended filing deadline and the individual extended filing deadline is coming up on October 16th. If you have not yet filed your 2016 tax returns, please provide us with any missing documents or information by early next week so that we have adequate time to complete your returns in advance of the final deadline.

We will be scheduling year-end tax planning appointments with our clients beginning immediately after the October 16th deadline and through early December. Those who have done tax planning with us in the past know the tax savings that can occur by properly planning before the year ends. If you have questions or would like to schedule your year-end tax planning appointment, please contact us.

Mark J Weech, CPA