The IRS Dirty Dozen Tax Scams: Abuse of Charitable Deductions

Each year, the Internal Revenue Service releases a list of the 12 most popular tax scams for the year. The 2008 list is out, and I thought it would be fun to go through them individually to show you how criminals are trying to take advantage of taxpayers. The basic idea behind all of these scams is simple: prey on a taxpayer's fear of the IRS or their desire to avoid paying taxes.

Use the information here to help avoid being taken advantage of by a scammer who wants your money. And use this basic rule of thumb for any offer or communication regarding taxes: If it sounds too good to be true, it probably is. Don't get fooled by claims regarding mysterious refunds or tax bills. When in doubt contact the IRS directly for help with your situation.

Donations to legitimate charitable organizations registered with the IRS are tax deductible, giving taxpayers an extra incentive to donate money. However, some taxpayers try to disguise payments as charitable contributions when they don't really qualify to be deducted. Others try to establish "charitable" organizations for additional deductions, when what they're really trying to do is skirt the tax laws.

Taxpayers also have been known to take deductions for items that don't really qualify as charitable contributions, such as private school tuition or purchase of items at a charity auction. Be careful and read the rules carefully. The IRS is getting tough on charitable deductions.