Courtesy of Fox News.com
Helping Katrina Victims
Friday, September 02, 2005
By Gail Buckner, CFP
PHOTOS
Click image to enlarge
STORIES ARCHIVE LINKS
•Relief Comes to New Orleans in Full Force
Dear Friends,
The tragic loss and devastation caused by Hurricane Katrina are truly overwhelming. The pictures we’re seeing and personal stories we’re hearing don’t begin to describe the scope of the destruction — not only of property, but more importantly, of lives. It’s as if a tsunami hit our country’s Gulf Coast.
The human reflex is to want to reach out and help. For most of us, this will take the form of financial assistance. But before you write that check, take a moment to investigate out the organization you’re giving it to. As we’ve seen in previous natural disasters, like swamp snakes, scam artists slither out of the woodwork during times like these.
GuideStar is a clearinghouse for information about nonprofit organizations. Its Web site, http://www.guidestar.com , only lists bona fide charities, i.e. organizations that are either registered with the I.R.S. or have provided proof that they meet I.R.S. criteria for tax-exempt entities. If an organization isn’t listed, there’s a chance your donation will not be tax-deductible.
"The only way a charitable deduction will decrease your income tax bill is if you itemize," according to John Battaglia, Tax Director at Deloitte Private Client Advisors. This means that instead of taking the standard deduction allowed, you fill out Schedule A of your federal tax return. In addition to charitable contributions, other items you can include on Schedule A are state and local taxes, real estate taxes, and mortgage interest.
For instance, the standard deduction in 2004 for a couple filing married/joint was $9,700. “You get this whether you give or not,” says Battaglia. However, if your charitable donations and other Schedule A deductions exceed this amount, you’re better off itemizing.
Unlike other deductions, such as business expenses, you don’t have to meet a certain level of charitable contributions before they start to reduce your taxable income. For every dollar you donate, you can subtract a dollar. There is also no “phase-out” for higher income tax payers.
This should give you an idea of how much the government wants to encourage us to be generous: charitable contributions are fully deductible even if you are subject to the alternative minimum tax.
However, “there is a limit on how much you can deduct in a given year,” says Battaglia. But few people are going to find this a problem: the maximum deduction for cash contributions, which is 50 percent of your adjusted gross income. Any excess is carried forward and deducted in future tax years.
If you are considering donating a used vehicle, keep in mind the rules got much stricter this year. If you volunteer your time and services, these are never deductible. However, any travel, food, or lodging expenses you incur because of your volunteer work are deductible, so save these receipts.
While you don’t need a receipt for a contribution of under $250, if you’re donating property, you can only deduct the current fair market value. The I.R.S. cautions that “you should claim only what the item would sell for at a garage sale, a flea market, or second hand or thrift store.” In addition, if your total non-cash contributions for the year exceeds $500 you have to attach Form 8283 to your tax return. If you donate any single item worth more than $5,000, you’ll probably need to justify your deduction with an appraisal.
I.R.S. Publication 526, Charitable Contributions, answers a lot of questions about this topic. If you’re looking for guidance about how to put a value on donated property, check out I.R.S. Publication 561.
But, again, even if you fill out your tax return properly, you won’t get a deduction if your donation wasn’t made to a “qualified” organization. Remember, crooks won’t hesitate to claim a religious affiliation if it makes it easier to take your money. According to GuideStar, if a faith-based organization is asking for a donation and isn’t listed on their website, “ask to see its official listing in a directory for its denomination.”
“The greatest portion of charitable giving in this country goes to religious institutions,” says GuideStar spokesperson Suzanne Coffman. Many faith-based groups, such as the Salvation Army, also provide disaster relief. The best approach is to donate to these organizations either directly by check or credit card, or through your place of worship. Coffman advises caution about giving to someone who knocks on your door, “even if they claim to represent that organization.
Before you donate, take a moment to think about how you want to help Katrina victims. Some nonprofits have very specific missions, such as providing food to disaster victims; others, such as the American Red Cross, have broader mandates and provide a wide range of help. Many organizations have secure links that enable you to donate by credit card over the Internet (see below).
To be certain your contribution will be well spent, spend a few minutes on the GuideStar website to compare charities. A few clicks of your mouse will tell you how much of the money a collected is actually used for a nonprofit’s “mission” compared to paying staff, overhead, and soliciting contributions.
Trust your gut instincts. For the sake of the people you’re trying to help as well as your own, don’t give money to any organization you have doubts about. “There are nearly a million charities in this country,” says Coffman. “If you don’t feel comfortable giving to one, you’ll find another you [will] be comfortable giving to.”
After speaking with a number of individuals at various disaster relief organizations, I’ve come away with two things to keep in mind: 1. Before donating ask the folks who are experts in disaster aid what is most needed. 2. Don’t just write a check and forget them; it’s going to take months and possibly years for the victims of Katrina to put their lives back together.
Thoughts from the Disaster Relief Experts
The first charity we think of when we hear the word “disaster” is the American Red Cross. While you might want to help Katrina victims by collecting clothing, blankets, and other household goods, a spokesperson in the Washington, D.C. headquarters says, “At this point, the best thing individuals can do is support us with funds.”
A major effort is underway onsite to coordinate the distribution of basic necessities and, as you can imagine, the situation is very confusing at this point. Right now, sending a truckload of jackets, kitchen appliances, or mattresses to the area will only make things worse. The time will come for these things in the weeks and months ahead. The holidays are going to be particularly bleak for the hundreds of thousands of people left homeless.
Right now Hurricane Katrina is the disaster that’s on our minds. Unfortunately, there will be others. For the sake of your loved ones, visit http://www.RedCross.org and follow the “Six Steps to Prepare for Disaster,” which involves everything from making a plan to volunteering through your local Red Cross Chapter.
Make sure your furry and feathered family members are included in your plans. Pet owners can find a disaster preparedness checklist at the website of the Humane Society of the United States (http://www.hsus.org ).
The HSUS is sending Disaster Animal Response Teams (DART) to the hurricane-affected areas to search for animals that may have been left behind because of the hurricane. “People have been calling us with exact locations for their stranded animals,” says HSUS Public Relations Manager Belinda Mager. Once these sites are checked, the teams will start searching building-by-building.
Like the Red Cross, the Humane Society has received calls from people volunteering to help. “You have to understand it’s a very dangerous situation,” says Mager. “You can’t just drive down with a bag of dog food.” But you can help the next time disaster strikes by becoming trained as a DART volunteer. At this point, she says, money is what is needed most as “it’s very expensive” to send in these animal rescue teams.
Both the American Red Cross and Humane Society of the United States, as well as other relief organizations, will allow you to specify that your donation be used to help Katrina victims simply by writing this on your check.
Give what you can. You never know when you might be on the receiving end.
Gail
To Donate to the American Red Cross:
By U.S. Mail:
American Red Cross
Disaster Relief Fund
P.O. Box 37243
Washington, D.C. 20013
By phone:
1-800-HELPNOW
Via the Internet: http://www.redcross.org/donate/donation-form.org
To Donate to the Humane Society of the U.S.:
By U.S. Mail:
HSUS
2100 L St., NW
Washington, DC 20037
Via the Internet:
https://secure.hsus.org/01/disaster_relief_fund_2005?source=drfhbw
or go to http://www.hsus.org and click on the link to the Disaster Relief Fund
If you have a question for Gail Buckner and the Your $ Matters column, send them to: moneymatters@foxnews.com , along with your name and phone number.
Gail Buckner and Foxnews.com regret that all letters cannot be addressed and that some might be combined in order to more completely address a topic.
To access Gail's past columns, simply use our new "Search" function: type in "Buckner" and you'll be able to get all Your $ Matters columns since April 2001.
The views expressed in this article are those of Ms. Buckner or the individual commentator. You should consult your own financial adviser for advice regarding your particular financial circumstances. This article is for information only and is not an offer of the sale of any mutual fund or other investment.
Helping Katrina Victims
Friday, September 02, 2005
By Gail Buckner, CFP
PHOTOS
Click image to enlarge
STORIES ARCHIVE LINKS
•Relief Comes to New Orleans in Full Force
Dear Friends,
The tragic loss and devastation caused by Hurricane Katrina are truly overwhelming. The pictures we’re seeing and personal stories we’re hearing don’t begin to describe the scope of the destruction — not only of property, but more importantly, of lives. It’s as if a tsunami hit our country’s Gulf Coast.
The human reflex is to want to reach out and help. For most of us, this will take the form of financial assistance. But before you write that check, take a moment to investigate out the organization you’re giving it to. As we’ve seen in previous natural disasters, like swamp snakes, scam artists slither out of the woodwork during times like these.
GuideStar is a clearinghouse for information about nonprofit organizations. Its Web site, http://www.guidestar.com , only lists bona fide charities, i.e. organizations that are either registered with the I.R.S. or have provided proof that they meet I.R.S. criteria for tax-exempt entities. If an organization isn’t listed, there’s a chance your donation will not be tax-deductible.
"The only way a charitable deduction will decrease your income tax bill is if you itemize," according to John Battaglia, Tax Director at Deloitte Private Client Advisors. This means that instead of taking the standard deduction allowed, you fill out Schedule A of your federal tax return. In addition to charitable contributions, other items you can include on Schedule A are state and local taxes, real estate taxes, and mortgage interest.
For instance, the standard deduction in 2004 for a couple filing married/joint was $9,700. “You get this whether you give or not,” says Battaglia. However, if your charitable donations and other Schedule A deductions exceed this amount, you’re better off itemizing.
Unlike other deductions, such as business expenses, you don’t have to meet a certain level of charitable contributions before they start to reduce your taxable income. For every dollar you donate, you can subtract a dollar. There is also no “phase-out” for higher income tax payers.
This should give you an idea of how much the government wants to encourage us to be generous: charitable contributions are fully deductible even if you are subject to the alternative minimum tax.
However, “there is a limit on how much you can deduct in a given year,” says Battaglia. But few people are going to find this a problem: the maximum deduction for cash contributions, which is 50 percent of your adjusted gross income. Any excess is carried forward and deducted in future tax years.
If you are considering donating a used vehicle, keep in mind the rules got much stricter this year. If you volunteer your time and services, these are never deductible. However, any travel, food, or lodging expenses you incur because of your volunteer work are deductible, so save these receipts.
While you don’t need a receipt for a contribution of under $250, if you’re donating property, you can only deduct the current fair market value. The I.R.S. cautions that “you should claim only what the item would sell for at a garage sale, a flea market, or second hand or thrift store.” In addition, if your total non-cash contributions for the year exceeds $500 you have to attach Form 8283 to your tax return. If you donate any single item worth more than $5,000, you’ll probably need to justify your deduction with an appraisal.
I.R.S. Publication 526, Charitable Contributions, answers a lot of questions about this topic. If you’re looking for guidance about how to put a value on donated property, check out I.R.S. Publication 561.
But, again, even if you fill out your tax return properly, you won’t get a deduction if your donation wasn’t made to a “qualified” organization. Remember, crooks won’t hesitate to claim a religious affiliation if it makes it easier to take your money. According to GuideStar, if a faith-based organization is asking for a donation and isn’t listed on their website, “ask to see its official listing in a directory for its denomination.”
“The greatest portion of charitable giving in this country goes to religious institutions,” says GuideStar spokesperson Suzanne Coffman. Many faith-based groups, such as the Salvation Army, also provide disaster relief. The best approach is to donate to these organizations either directly by check or credit card, or through your place of worship. Coffman advises caution about giving to someone who knocks on your door, “even if they claim to represent that organization.
Before you donate, take a moment to think about how you want to help Katrina victims. Some nonprofits have very specific missions, such as providing food to disaster victims; others, such as the American Red Cross, have broader mandates and provide a wide range of help. Many organizations have secure links that enable you to donate by credit card over the Internet (see below).
To be certain your contribution will be well spent, spend a few minutes on the GuideStar website to compare charities. A few clicks of your mouse will tell you how much of the money a collected is actually used for a nonprofit’s “mission” compared to paying staff, overhead, and soliciting contributions.
Trust your gut instincts. For the sake of the people you’re trying to help as well as your own, don’t give money to any organization you have doubts about. “There are nearly a million charities in this country,” says Coffman. “If you don’t feel comfortable giving to one, you’ll find another you [will] be comfortable giving to.”
After speaking with a number of individuals at various disaster relief organizations, I’ve come away with two things to keep in mind: 1. Before donating ask the folks who are experts in disaster aid what is most needed. 2. Don’t just write a check and forget them; it’s going to take months and possibly years for the victims of Katrina to put their lives back together.
Thoughts from the Disaster Relief Experts
The first charity we think of when we hear the word “disaster” is the American Red Cross. While you might want to help Katrina victims by collecting clothing, blankets, and other household goods, a spokesperson in the Washington, D.C. headquarters says, “At this point, the best thing individuals can do is support us with funds.”
A major effort is underway onsite to coordinate the distribution of basic necessities and, as you can imagine, the situation is very confusing at this point. Right now, sending a truckload of jackets, kitchen appliances, or mattresses to the area will only make things worse. The time will come for these things in the weeks and months ahead. The holidays are going to be particularly bleak for the hundreds of thousands of people left homeless.
Right now Hurricane Katrina is the disaster that’s on our minds. Unfortunately, there will be others. For the sake of your loved ones, visit http://www.RedCross.org and follow the “Six Steps to Prepare for Disaster,” which involves everything from making a plan to volunteering through your local Red Cross Chapter.
Make sure your furry and feathered family members are included in your plans. Pet owners can find a disaster preparedness checklist at the website of the Humane Society of the United States (http://www.hsus.org ).
The HSUS is sending Disaster Animal Response Teams (DART) to the hurricane-affected areas to search for animals that may have been left behind because of the hurricane. “People have been calling us with exact locations for their stranded animals,” says HSUS Public Relations Manager Belinda Mager. Once these sites are checked, the teams will start searching building-by-building.
Like the Red Cross, the Humane Society has received calls from people volunteering to help. “You have to understand it’s a very dangerous situation,” says Mager. “You can’t just drive down with a bag of dog food.” But you can help the next time disaster strikes by becoming trained as a DART volunteer. At this point, she says, money is what is needed most as “it’s very expensive” to send in these animal rescue teams.
Both the American Red Cross and Humane Society of the United States, as well as other relief organizations, will allow you to specify that your donation be used to help Katrina victims simply by writing this on your check.
Give what you can. You never know when you might be on the receiving end.
Gail
To Donate to the American Red Cross:
By U.S. Mail:
American Red Cross
Disaster Relief Fund
P.O. Box 37243
Washington, D.C. 20013
By phone:
1-800-HELPNOW
Via the Internet: http://www.redcross.org/donate/donation-form.org
To Donate to the Humane Society of the U.S.:
By U.S. Mail:
HSUS
2100 L St., NW
Washington, DC 20037
Via the Internet:
https://secure.hsus.org/01/disaster_relief_fund_2005?source=drfhbw
or go to http://www.hsus.org and click on the link to the Disaster Relief Fund
If you have a question for Gail Buckner and the Your $ Matters column, send them to: moneymatters@foxnews.com , along with your name and phone number.
Gail Buckner and Foxnews.com regret that all letters cannot be addressed and that some might be combined in order to more completely address a topic.
To access Gail's past columns, simply use our new "Search" function: type in "Buckner" and you'll be able to get all Your $ Matters columns since April 2001.
The views expressed in this article are those of Ms. Buckner or the individual commentator. You should consult your own financial adviser for advice regarding your particular financial circumstances. This article is for information only and is not an offer of the sale of any mutual fund or other investment.
posted by Ben at 11:23 AM
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