Tuesday Jan. 19, 2010
Posted 2 p.m. EDT
Did you give to a Haiti relief effort or plan to? Then don't file your taxes yet. You soon might be able to deduct that 2010 donation on your 2009 tax return.
The top Democrat and Republican on the House tax-writing Ways and Means Committee have worked out a bill that will let you claim on 2009 taxes any contributions to Haiti earthquake recovery efforts that are made between Jan. 12, the day of the disaster, and Feb. 28.
The other donation tax rules still apply. You must give to a qualified charity. You must itemize to claim any charitable deduction. And you need to get a receipt for your gift just in case the IRS later wants proof.
The measure by Ways and Means Chairman Charles Rangel, D-N.Y., and ranking minority member Dave Camp, R-Mich., already has received a thumbs up from their tax-compatriots on the Senate Finance Committee.
The only thing that could slow down the House bill is another measure being pulled together by New York's two senators.
Sen. Charles Schumer and Sen. Kirsten Gillibrand, both Democrats, want to temporarily remove the deduction limits for donations to Haiti. Under current law, individual taxpayers cannot deduct as charitable gifts more than 50 percent of their income in a tax year. Businesses are limited to annual deductions of 10 percent of income.
New breaks based on old laws: Both the separate House and Senate measures are based on previous tax laws dealing with donations that were written years ago to deal with other natural disasters.
The Rangel-Camp measure is very similar to the tax-time-shifting break that allowed philanthropic taxpayers to deduct donations made early in 2005 to efforts targeting the Dec. 26, 2004, Indian Ocean tsunami on their 2004 returns.
Then in the wake of Hurricane Katrina's devastation of New Orleans later in 2005, lawmakers passed an emergency tax act that allowed for much more generous charitable contribution deductions for donations to the storm's victims made through the end of that tax year.
While there might be a bit of debate on the two different measures, I suspect that Capitol Hill will quickly find a way to merge the two.
Speaking of receipts: By now you've no doubt heard that the American Red Cross, via a partnership with Mobile Accord and the mGive Foundation, is accepting texted donations.
Just type "HAITI" to 90999 and you'll automatically send $10 to the nonprofit's Haitian rescue and relief efforts. Your gift will appear on your monthly wireless bill or be debited from a prepaid account balance.
And yes, the same tax rules apply to this new technological method of giving. Itemize. Give to a qualified charity (which the Red Cross is). Get a receipt.
Texters can get tax receipts at www.mgive.org/receipt. There you'll enter your mobile number and a PIN will be sent via text to your phone. Once you get that, enter it on the site where requested and you'll see confirmation of all donations you have made via the mobile phone number that was entered.
Then you can print that record as an IRS-acceptable receipt for your tax records.
Read more tax blogs.