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The following alert is from Desmond Sheridan.
New Law For Haiti Relief Charitable Contributions
President Obama signed a new law last month which allows taxpayers to claim a charitable contribution deduction in tax year 2009 for donations made after January 11, 2010 and before March 1, 2010, for the relief of victims in areas affected by the January 12, 2010 earthquake in Haiti. This option is available only if the contribution is in cash and otherwise meets the requirements for charitable contribution deductions.
Anyone who is contemplating making a contribution to help victims of the earthquake in Haiti should consider doing so before March 1, 2010 in order to deduct the contribution in 2009. Of course, the taxpayer must analyze his or her situation to determine whether 2009 or 2010 yields a better result.
Usually, a charitable deduction is only available for the tax year in which the contribution is actually made. The new law is unique because it allows taxpayers to treat charitable contributions of cash made after January 11, 2010, and before March 1, 2010 as contributions made on December 31, 2009, but only if the contributions were for the purpose of providing relief to victims in areas affected by the January 12, 2010 earthquake in Haiti.
The general rules on claiming a tax deduction for charitable donations still apply: Taxpayers must itemize their deductions on Schedule A. Those claiming the standard deduction, including all short-form filers, aren't eligible. IRS also emphasizes that taxpayers can choose to deduct qualifying Haiti earthquake relief donations on either 2009 or 2010 returns, but the same item can't be claimed for both years.
The law doesn't specifically define "cash contribution." However, the explanation on IRS's website explain that this includes contributions made by text message, check, credit card or debit card. A check mailed before March 1, 2010 will qualify for the 2009 deduction even though the charity doesn't cash it until after that date.
The contributions must be made specifically for the relief of victims in areas affected by the January 12 earthquake in Haiti. It appears that only contributions fully earmarked for the Haiti earthquake relief qualify for the election.
A contribution made to a fund that generally provides relief for earthquake victims and victims of other disasters may not qualify.
Finally, 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 December 31, 2009.
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