Alerts and Updates

Contributions to Haiti Relief Efforts May Be Deducted on 2009 Tax Returns

January 25, 2010

On January 22, 2010, following swift passage by the House and Senate, President Obama signed into law H.R. 4462—the Haiti Assistance Income Tax Incentive Act—allowing donors to accelerate the income-tax benefits for charitable cash contributions toward the relief of victims of the January 12 Haiti earthquake. This provision applies to monetary donations, not goods, services or other non-cash contributions.

The new law permits individuals who make charitable contributions to aid Haitian earthquake victims to elect to claim an itemized charitable deduction on their 2009 tax return, rather than wait until next year to claim the deductions on their 2010 tax return. The election would apply only to Haitian relief contributions made in cash after January 11, 2010, and before March 1, 2010. If the election is made, Haiti relief donations would be deductible on the 2009 return, not on the 2010 return. Taxpayers can choose to take the deduction in 2009 or 2010. The contributions must be made to a qualified domestic charity that is assisting Haiti. To benefit, taxpayers must itemize their deductions, as those who claim the standard deduction are not eligible.

Contributions may be made by check, debit or credit card. Notably, the law also includes a provision for donations made through text-messaging services and allows reduced recordkeeping requirements. For these contributions, a telephone bill would satisfy U.S. Code Sec. 170(f)(17) recordkeeping requirements if it shows the name of the donee organization, the date of the contribution and the amount of the contribution. Currently, cash contributions are limited to 50 percent of adjusted gross income, although in similar 2005 legislation, Congress raised the limitation to 100 percent of adjusted gross income.

High-income taxpayers may wish to consider reporting the deductions in 2010, as income-tax rates may rise and the deductions may provide greater value.

For Further Information

If you would like more information about this topic or your own unique situation, please contact Michael A. Gillen, Steven M. Packer or the practitioner with whom you are regularly in contact.

As required by United States Treasury Regulations, you should be aware that this communication is not intended by the sender to be used, and it cannot be used, for the purpose of avoiding penalties under United States federal tax laws.

Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.