January 27, 2010
People who give to charities providing earthquake relief in Haiti can claim these donations on the tax return they are completing this season, according to the Internal Revenue Service.
Taxpayers who itemize deductions on their 2009 return qualify for this special tax relief provision, enacted Jan. 22. Only cash contributions made to these charities after Jan. 11, 2010 (this is after the earthquake), and before March 1, 2010, are eligible. This includes contributions made by text message, check, credit card or debit card.
"Christians have opened their hearts to help those affected by the Haiti earthquake," said Dan Busby, ECFA’s President. "This new law provides an immediate tax benefit for those who have made generous donations."
The new law only applies to cash (as opposed to property) contributions. The contributions must be made specifically for the relief of victims in areas affected by the Jan. 12 earthquake in Haiti. Donors have the option of deducting these contributions on either their 2009 or 2010 returns, but not both.
To get a tax benefit, donors must itemize their deductions on Schedule A. Those who claim the standard deduction, including all short-form filers, are not eligible.
Givers should be sure their contributions go to charities that will use the donations for the intended purpose. ECFA has accredited 100 member ministries who are providing relief work in Haiti. Click here to review the list of these charities: http://www.ecfa.org/ServantMatch.aspx?Type=Haiti. Contributions to foreign organizations generally are not deductible.
Federal law requires that taxpayers keep a record of any deductible donations they make. For donations by text message, a telephone bill will meet the recordkeeping requirement if it shows the name of the donee organization, the date of the contribution and the amount of the contribution. For cash contributions made by other means, be sure to keep a bank record, such as a cancelled check, or a receipt from the charity showing the name of the charity and the date and amount of the contribution.
Allocation of contributions. Presumably, taxpayers can't allocate a portion of a contribution to more than one tax year. A taxpayer who makes multiple contributions may treat each one separately. For example, a taxpayer making three separate gifts of $100 each may treat two gifts as made on Dec. 31, 2009, and one gift as made on the actual date of gift (for example, Jan. 15, 2010).
State law. While taxpayers in States that mirror Federal tax law should expect the same tax treatment for Haiti relief contributions, donors should verify that this State tax treatment in facts applies.
Form of contribution. Presumably it also includes money contributions and those made by money order.
Date check is mailed. A check mailed by Mar. 1, 2010 will qualify for the 2009 deduction even though the charity doesn't cash it until after that date.
Contributions that qualify for the election. The contributions must be made specifically for the relief of victims in areas affected by the Jan. 12 earthquake in Haiti. It appears that only contributions fully earmarked for the Haiti earthquake relief qualify for the election.
Eligible donors. It should be borne in mind that the election is not limited to individuals. Corporations and other entities also can choose to deduct otherwise deductible earthquake relief contributions as though they were made on Dec. 31, 2009.
Related information:
Text of H.R. 4462
To accelerate the income tax benefits for charitable cash contributions for the relief of victims of the earthquake in Haiti.
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,
SECTION 1. ACCELERATION OF INCOME TAX BENEFITS FOR CHARITABLE CASH CONTRIBUTIONS FOR RELIEF OF VICTIMS OF EARTHQUAKE IN HAITI.
- In General—For purposes of section 170 of the Internal Revenue Code of 1986, a taxpayer may treat any contribution described in subsection (b) made after January 11, 2010, and before March 1, 2010, as if such contribution was made on December 31, 2009, and not in 2010.
- Contribution Described—A contribution is described in this subsection if such contribution is a cash contribution made for the relief of victims in areas affected by the earthquake in Haiti on January 12, 2010, for which a charitable contribution deduction is allowable under section 170 of the Internal Revenue Code of 1986.
- Recordkeeping—In the case of a contribution described in subsection (b), a telephone bill showing the name of the donee organization, the date of the contribution, and the amount of the contribution shall be treated as meeting the recordkeeping requirements of section 170(f)(17) of the Internal Revenue Code of 1986.
- Paygo—All applicable provisions in this section are designated as an emergency for purposes of pay-as-you-go principles.
This text is provided with the understanding that ECFA is not rendering legal, accounting, or other professional advice or service. Professional advice on specific issues should be sought from an accountant, lawyer, or other professional.