The Tax Club Report

The people in Capitol Hill are considering legislation allowing the taxpayers to deduct their Haiti aid donations on their tax returns. Introduced by a bipartisan group of lawmakers from both Houses in Congress, the legislation would pave the way for individuals who make charitable contributions to help victims of the recent earthquake in Haiti to claim an itemized charitable deduction on their 2009 tax return instead of waiting until next year.

“The American people are responding with generosity and compassion to the devastating earthquake in Haiti, donating their hard-earned money and time so that those who are suffering may soon find relief,” said the Chairman of the House Ways and Means Committee, Charles Rangel. He is joined by ranking member Dave Camp, majority whip James Clyburn and Republican whip Eric Cantor in introducing this legislation. This move is intended to encourage the American people to contribute generously to the relief efforts mobilized around the world in the wake of the catastrophic earthquake in Haiti last week.  This impoverished country is asking for fiscal help to start the long process of rebuilding and restoring order to its communities.

The IRS allows contributions to domestic, tax-exempt, charitable organizations that provide assistance to people in foreign lands to qualify as tax-deductible contributions for federal income tax purposes, provided that the U.S. organization has full control and discretion over the use of such funds. Contributions to foreign organizations generally are not deductible. Contributions to benefit specific individuals or families are also not deductible. For individuals, the deduction is made on Schedule A, Itemized Deductions, and the amount that may be deducted is limited to 50% of the adjusted gross income. However, the non-deductible portion may be deducted on the taxpayer’s future tax returns. To qualify as a tax deduction, the donations must be substantiated by a bank record or a written communication from the charity showing the name of the organization, the date when the contribution was made and the amount of the contribution.

To avoid being victimized by phony scams that proliferated in the aftermath of the earthquake, the public is advised to be vigilant and to check the track record of each organization before making their donations. Fraudulent schemes may be perpetrated through the telephone, internet, e-mail or in-person solicitations. Check with the IRS if you have a specific charity in mind and would like to verify if it is a qualified organization. Some organizations, such as churches or government institutions, may be qualified even though they are not listed on the IRS website.

Because Congress unanimously passed a similar bill in 2005 in the wake of the Indian Ocean tsunami, it is expected that this new legislation will be passed as well. The donations would have to be made before March 1 to qualify for 2009 deductions. Please call the Tax Club at (866)840-1829 ext. 5438 if you would like to know more about claiming your Haiti aid donations on your tax return.

Tags: itemized deductions, tax returns, the tax club

This entry was posted on Thursday, January 21st, 2010 at 2:29 pm and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.