DRWMAG.COM 22 #357 • JANUARY 2019 • 30TH ANNIVERSARY Holiday season is just be- hind us, and undoubtedly we each received numerous solicitations by phone or mail to assist the needy or the victims of hurricanes or fires. Many of those “solicitors” are ripoff artists who are trying to get their greedy claws onto your money. If they succeed, two things happen.Those in need received nothing, and any donation will not qualify for a tax deduction on your 1040.Before you sign that check, you might want to go to a website like Charity Navigator to try to determine a charity’s validity. Some of the critical components of a potential scam charity might be: • Will not provide evidence that your contribution is tax- deductible • Uses a name which is very similar to a well-known charity • Attempts to get you to donate immediately rather than give you a chance to think it over • Requests cash and asks you to wire transfer the money Obviously this list is not exclusive, but the appearance of compo- nents of it should put you on high alert.Certain organizations do not require such close scrutiny.These might include a church, mosque, or synagogue, an institution of higher learning, a government unit at either the state or local level (if the money is in support of some public service),certain publicly supported organizations that are op- erated as trust funds, foundations, etc. which operate within the charitable forum. Just because the organization to which you give the money is a “qualified” charity, you cannot automatically take a charitable deduc- tion.There are a number of prerequisites in certain charitable areas which must be met before you can take a deduction on scheduleA of your 1040.The first is that you must itemize your deductions. If you take a standard deduction, you can’t utilize your donation on your tax return. Many people make small cash donations to charities.Technically the IRS could require you to show them a bank record which shows the qualifications of the charity, the amount and date of the transfer, and some type of other verification. In smaller amounts of money this will never occur because the IRS has more important things to do than to start verifying everybody’s $200 donation. Once you exceed $250, you are supposed to provide written acknowledgment of the contribution from the charity which will show the amount contributed, and whether the charity gave you something in return (the old chicken dinner trick). If the charity did give you something in either goods or services, you must subtract the value of what you were given from the amount of the donation. If you give larger gifts, especially non-cash gifts, there are certain ap- praisals and forms which must be attached to the tax return to verify the value.Also, if your gift is extremely large there are certain limi- tations based on each taxpayer’s adjusted gross income.This might include old furniture, antiques, or even special artifacts – one of my articles depicted a charitable deduction involving a hunter donating a part of his collection of pelts and bones to a charity. The rules donating an automobile were changed a few years ago. One can’t deduct the donation until the charity actually sells the vehicle and the amount that you can deduct is limited to the amount the charity receives from the sale. Prior to that, people would look to something like the Kelly Blue Book to determine the value.The IRS quickly determined that people were donating junkers which were largely worthless and taking deductions of the Blue Book value of a car, which is supposed to be in at least serviceable condition. If you itemize, you might want to give two years of gifts to a charity in one year to enhance the amount of charitable deduction which can be taken in one of the two years.This might enable you to take an itemized deduction in one year, and utilize the standard deduction in the next. Finally, a tax break for old folks like me. If you are over 70 ½, you can directly transfer up to $100,000 from your IRA account to a qualified (of course) charity.You don’t get a charitable deduction, but the hundred thousand dollars is nontaxable and counts toward the minimum required annual distribution by persons whose age ex- ceed 70 ½. The subject of charities and scams could cover several articles, but this is just to give each of my readers a caveat; before you con- tribute to a “charity”, do a bit of research and make sure you’re giv- ing it to a real charity. In any event, if I do not write an article next month, I wish all of you a healthy happy new year and exhort you to keep reading my scintillating articles. BY ROBERT S. BLUMENFELD Robert S. Blumenfeld is a tax attorney who spent 32 years with the IRS. Contact him at 954.384.4060 or rblumenf@aol.com. Of scam charities and legit charitable deductions THE TAX DOCTOR