Tax 2007: Stricter Charity Donation Rule

While filing your year 2007 tax return, you need to be careful about a new twist in the clause for charity donations.

In previous years, charitable givers didn't need receipts for cash donations under $250, while claiming a deduction for such donations. For 2007 tax return, however, you need substantiation for any amount that you give. Unless you possess a receipt, you can no longer take a deduction for those contributions.

A cancelled check or bank record, or a receipt from the charity will do, as long as the name of the organization, the date and amount of the donation are noted. Taxpayers don't need to file those receipts with their return, but they need to have them on hand in case the IRS decides to have an audit on your return.

Also, note that the IRS now requires any donated clothing or household items donated to be in "good" or better condition to qualify as deductible. If the IRS questions your claim, you'll need to prove the condition and the value of your donation. You may consider photographing your items before donating them, and keep all receipts.

Also, keep in mind another new rule introduced in 2006 that still applies: If you claim donated property worth in excess of $5,000, you need a qualified appraisal.

Related webpages:
IRS publications on charitable donations
IRS publication on Qualified Appraisal

Warning: Fake IRS Email Scam

Last week FBI, Better Business Bureau and California prosecutors issued warnings concerning potential disaster related fraud schemes in connection with the Southern California wildfires. Many of these schemes are Internet-based scams representing themselves to be disaster relief charities.

In a new development to that story of phising, IRS issued a warning about a new scam e-mail that appears to be a solicitation from the IRS and the U.S. government for charitable contributions to victims of the recent Southern California wildfires.

In some cases in an effort to appear legitimate, the bogus e-mails include text from an actual speech about the wildfires by a member of the California Assembly. A link in the e-mail sends the e-mail recipient to a Web site that looks like the IRS Web site, but isn't. They are then directed to click on a link that opens a donation form that asks for personal and financial information.

The IRS categorically said that it does not ever send e-mails to taxpayers soliciting contributions to a charitable cause. Recipients of the scam e-mails can help IRS in thwarting this scheme by forwarding any such e-mails to phishing@irs.gov.

Beware of Charity Scams

Thanksgiving is over and it's time to finish the year with traditional festivities. Christmas is less than one month away and, sooner than we think, the year 2007 will knock the door. It's also time to give and forgive. But do not forget to be careful -- to ensure that your act of giving goes to right places and becomes maximally effective.

Not long after the Tsunami devastated south Asia in 2004, the Better Business Bureau (BBB) began receiving numerous complaints of charity scams carried out in several ways. Similar complaints were also received in the wake of the relief efforts for the victims of Hurricane Katrina last year. That's why they're warning Americans against donating to just anyone.

Charities like the Salvation Army and the American Red Cross have done a great job of providing help to victims of past disasters and it is expected that will happen again. But if you would like to support another charity, check on them first. The best places to check on these charities and how effectively they spend their collection money are these two useful websites:

CharityNavigator.org which ranks some 35 hundred charities with zero to four stars depending on how well they spend donations.

Give.org is a useful website from the Better Business Bureau and offers guidance to donors on making informed giving decisions through their charity evaluations, various "tips" publications, and publishes the quarterly Better Business Bureau Wise Giving Guide .

Beware of Charity Scam

Not long after the Tsunami devastated south Asia in 2004, the Better Business Bureau (BBB) began receiving numerous complaints of charity scams carried out in several ways. Similar complaints were also received in the wake of the relief efforts for the victims of Hurricane Katrina last year. That's why they're warning Americans against donating to just anyone.

Charities like the Salvation Army and the American Red Cross have done a great job of providing help to victims of past disasters and it is expected that will happen again. But if you would like to support another charity, check on them first. The best places to check on these charities and how effectively they spend their collection money are these two useful websites:

CharityNavigator.org which ranks some 35 hundred charities with zero to four stars depending on how well they spend donations.

Give.org is a useful website from the Better Business Bureau and offers guidance to donors on making informed giving decisions through their charity evaluations, various "tips" publications, and publishes the quarterly Better Business Bureau Wise Giving Guide .