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New law allows early deduction for Haiti relief

Filed Under: Taxes on February 05, 2010

A law signed by President Obama on January 22 lets you
take an early tax deduction for contributions you make
for earthquake relief to Haiti. And if you use your
cell phone to donate via a text message, the new law
gives you an easier method for substantiating your
contribution.

If you itemize deductions on your tax return, you may
elect to take a charitable deduction on your 2009 return
for Haiti contributions made after January 11, 2010,
and before March 1, 2010. Claiming a 2010 contribution
on your 2009 return will give you an earlier tax benefit,
though you may also wait until you file your 2010 return
to take the deduction.

Here are other important details.

* The contributions must be made specifically for relief
  related to the January 12, 2010, earthquake in Haiti.

* The contributions must be made to qualified charities,
  rather than to specific individuals.

* Only cash contributions qualify for the earlier 2009
  deduction option; contributions of property or goods
  do not qualify.

* Contributions made to foreign charities generally
  don’t qualify.

* You’ll need records to substantiate any deductible
  donations you make. But a special easing of the rules
  will allow you to use your telephone bill as
  substantiation for donations made by text message.
  The phone bill must show the name of the organization
  receiving your donation, the date of the contribution,
  and the amount you gave. For other donation methods,
  you’ll need a bank record or written communication
  from the charity.

* If you claim a Haiti relief deduction on your 2009
  return, you may not also claim the same donation on
  your 2010 return (which you’ll be filing in 2011).
  To decide whether to take the deduction on your 2009
  or 2010 return, run the numbers to see which year
  will give you the bigger tax savings. For 2009,
  higher-income taxpayers have a limit on their total
  itemized deductions. This limit is eliminated for
  2010, so the deduction could actually provide a
  bigger tax break if taken on your 2010 tax return.

For additional information or filing assistance, please
contact our office.

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