Tips and Advice Before Giving Money to Tsunami Effort

Under previous rules, taxpayers were required to wait until next year's filing season (2005) to claim a tax deduction for tsunami-related gifts made after Dec. 31, 2004. However, Congress approved a tax break for donations to charities supporting Asian tsunami relief efforts, allowing taxpayers to claim contributions made through January against last year's taxes. The new bill would roll back the date for all cash donations made for tsunami disaster relief until Jan. 31, 2005, and would allow you to claim the deductions on your 2004 tax return. The bill easily passed both the U.S. House of Representatives and Senate and goes to President Bush for his signature.

Get a match.

Many companies will match an individual employee's charitable contributions. Most organizations vary on the amount they will match, so it is important you contact someone in your human resources department to determine if you have a matching program and the value of your respective match.

Auction an item.

AuctionDrop, an eBay auction store, is offering a promotion for people interested in auctioning goods and using the proceeds to benefit victims of the tsunami. If you bring in an item to be auctioned (such as consumer electronics, jewelry or video game consoles) to a United Parcel Service outlet, it will ship the item for free to AuctionDrop, which will then sell it on eBay and donate 100 percent of the net proceeds to CARE's disaster relief fund. This is an excellent way to get rid of an unwanted Christmas present, help others and get a deduction (for the value of the good sold) at the same time. According to AuctionDrop, all items that remain unsold will be donated to the Salvation Army to be sold in its thrift stores and used to help needy people in the United States.

Goods are no good.

All the major charitable organizations are asking for monetary donations instead of goods. Getting goods like blankets, old clothes and food to relief workers is a difficult task. Your gift of money does not require a pickup or shipment.

Beware of possible scams.

When disaster strikes, many individuals want to help those in need by giving donations to aid organizations. Unfortunately, scam artists recognize this altruism as an opportunity to make money by approaching unsuspecting people. As such, it is critically important to research the organization to which you are giving money as well as be wary of some red flags. Here are some simple steps to take to avoid being scammed:

Ignore solicitations: First and foremost, like legitimate solicitations for aid, unseemly requests can come in the form of e-mail, telephone or door-to-door contact. Therefore, be sure to request written material from the soliciting organization before agreeing to give money. Never reply back to an e-mail soliciting your help for tsunami victims if it asks you to send your bank information or Social Security number.

Take your time. Steer clear of any solicitor or organization that pressures you to make a quick decision about giving.

Confirm tax-deductible status. If you want your contribution to be tax-deductible, be sure to confirm the tax status of the aid organization, which is available on the Internal Revenue Service Web site, www.irs.gov. To claim the deduction, the organization must be classified as tax exempt under section 501(c)(3) of the Internal Revenue Code.

Provide a secure contribution: If you decide to give online via credit card, exercise caution and make sure you are giving through a secure site. Alternatively, consider making donations via check or money order payable to a specific organization. Do not give cash.

Ask for a report and receipt. After you make a contribution, you are entitled to a report from the agency detailing how your money was spent. Ask for this. It is a record for your taxes and a report card to determine if you would contribute in the future. Additionally, you need to obtain a receipt for any contribution over $250 for your tax records.

Mellody Hobson, president of Ariel Capital Management (arielmutualfunds.com) in Chicago, is "Good Morning America's" personal finance expert. Ariel associates Matthew Yale and Aimee Daley contributed to this report.