Taxation & Estate Planning

DEDUCT YOUR 2010 HAITI CONTRIBUTIONS ON YOUR 2009 RETURN

By Charles Rubin

As an incentive to encourage charitable gifts to Haiti earthquake relief efforts, a new law was enacted this week. The new law allows taxpayers making charitable contributions to Haiti relief after January 11, 2010 and before March 1, 2010 to deduct the contributions on their 2009 income tax return (instead of waiting to take the deduction on their 2010 income tax returns).

Here are some of the particulars:

A. The contribution must be in cash, not property, and may be made by text message, credit card, check, or debit card;

B. The contribution must be for the relief of victims in the areas affected by the January 12th earthquake; and

C. The regular charitable deduction requirements must be met, including to requirements of a qualified charitable recipient organization and proper substantiation. For this purpose, text message contributions will be deemed to have met the substantiation requirements through use of a telephone bill that shows the name of the donee organization, the date of the contribution, and the amount of the contribution.

Taxpayers do not have to take the deduction in 2009 ? they can take it on their 2010 return if they think that will produce greater tax savings.

To take advantage of the new law, the taxpayers must itemize their deduction.

I?m not usually in favor of social engineering through the tax code, but its hard to find fault with this type of incentive. A similar law was enacted in 2005 for contributions in aid of the Indian Ocean tsunami.

News Release 2010-12, 01/25/2010

Full post as published by Rubin on Tax on January 28, 2010 (boomark / email).