Haiti Contributions Deductible on 2009 Return - Congress has passed a bill (HR 4462) to permit taxpayers contributing to Haitian relief charities to elect to treat contributions made after Jan. 11, 2010, and before Mar. 1, 2010, as if the contributions had been made on Dec. 31, 2009. If the election is made, Haiti relief donations would be deductible on the 2009 return, not the 2010 return. Caution should be exercised not to inadvertently deduct the same contribution in both years. This option would be available only if the contribution is made in cash and otherwise meets the requirements for charitable contribution deductions under Code Sec. 170 as summarized below.
- Contributions to domestic, tax-exempt, charitable organizations providing assistance to individuals in foreign lands are tax-deductible, provided that the U.S. organization has full control and discretion over the uses of donations.
- Contributions to foreign organizations generally are not deductible, nor are contributions to benefit specific individuals or families.
- To substantiate charitable contributions of money, regardless of amount, a taxpayer must have a bank record or a written communication from the charity showing the name of the charity and the date and amount of the contribution. One additional substantiation method is allowed individuals for Haitian relief contributions: monetary contributions made via text message on a cellular telephone may be substantiated with a telephone bill that shows the charitable organization's name, contribution date, and the amount of the contribution.
- Contributions are deductible in the year made unless donated for Haitian relief after Jan. 11, 2010, and before Mar. 1, 2010, in which case the contribution can be taken in on either the 2009 or 2010 return. To claim the donations, the taxpayer must itemize deductions.
- Generally, the deduction for charitable contributions is limited to 50% of the taxpayer's adjusted gross income, with a 5-year carryover period for excess deductions. The Haitian relief donations are subject to the normal limitations and carryover.
For high-income taxpayers, there is also a limitation on overall itemized deductions for 2009, but there is no overall limitation for 2010. Therefore, the tax benefit for these individuals may be greater by waiting until 2011 to claim their Haitian relief donations on their 2010 returns.
On its website, the IRS has posted deduction tips for taxpayers planning to make contributions to aid Haitian earthquake victims.
California - At this time, California does not conform to the accelerated deduction for Haiti contributions but did enact conformity when similar federal legislation was passed in regards to Indian Ocean tsunami contributions. It is anticipated that California will likely conform.