An overwhelming number of people and organizations have given to Haitian earthquake relief organizations and recently the IRS enacted several policies that will benefit U.S. taxpayers and not-for-profit organizations.
One such policy affects individuals who’ve donated to relief efforts since the January 12 earthquake. The IRS has granted them the ability to itemize their charitable deductions on their 2009 return.
“Americans have opened their hearts to help those affected by the Haiti earthquake,” said IRS Commissioner Doug Shulman. “This new law provides an immediate tax benefit for the many taxpayers who have made generous donations.”
Only cash contributions – as opposed to property or goods – made to these charities after January 11, 2010 and before March 1, 2010 are eligible. Taxpayers have the option of deducting these contributions on either their 2009 or 2010 returns, but not both.
Contributions made to domestic not-for-profit organizations would qualify for federal income tax deduction so long as the American charity has control and complete discretion in the use of these funds. Contributions to foreign charities generally are not deductible.
Federal law requires that taxpayers keep a record of any deductible donations they make. 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. This includes contributions made by text message, credit card or debit card.
“[Individuals] should continue to make such charitable contributions in the manner that best works for them,” said Sara Eguren, an IRS spokesperson for the New York City region. “If their contributions are made via text message, they can be sure that the IRS will accept, as proof of their contribution, a copy of their telephone bill that shows the text message.”
In another recent policy, the IRS has designated Haiti as a qualified disaster for federal tax purposes – as it did in the wake of the Indian Ocean Tsunami – allowing private foundations and charities to help their employees with necessary personal, family, living or funeral expenses not covered by insurance, and in doing so, not have this assistance not affect their exempt status.
The assistance to the employees can include expenses to repair or rehabilitate personal residences, or repair or replace the contents to the extent that they were not covered by insurance. These payments would not be included in the individual recipient’s gross income nor would it affect the exempt status of the foundation or charity.
Also, small for-profit businesses owned by U.S. taxpayers in Haiti can receive financial assistance and not declare it income, according to Eguren.
Individuals and not-for-profit organizations should check the list of qualifying charities – some organizations, such as churches of governments might qualify – and qualifying relief payments on www.IRS.gov.
