Most tax years you can't do much to trim your taxes after
2009 isn't most tax years.
Because of modified charitable donation tax rules in connection with Haitian earthquake relief efforts, some taxpayers might be able to bump up their itemized deduction amount.
A quick refresher: When the 7.0 earthquake hit that island nation on Jan. 11, donations quickly followed. So U.S. lawmakers, to both reward folks who gave and encourage even more to do so, quickly passed a measure making specific contributions made in 2010 deductible on 2009 tax returns.
The important point right now is the time limit. Only monetary gifts made between Jan. 12 and Feb. 28 are eligible for this special deduction option.
That means if you want to claim an earthquake-related deduction, you have only a few days left to contribute.
And since we are talking taxes, even efforts to help out disaster victims and the folks who contribute to their relief have specific rules as to what can be deducted on 2009 taxes.
Cash donations only: First, the donations must be what the IRS calls "cash." Now this doesn't mean just actual bills, although that is acceptable. It also includes the more common forms of charity in these types of instances: donations made check credit or debit cards and, in our digital age, by e-mail or text.
That box of food or clothing you dropped off at your church or food bank was indeed helpful. Thank you. And be sure to count the value of that gift on your taxes next year, since it doesn't count as a donation you can claim on your 2009 return.
Mind the date: As noted right up front, you only have until Sunday, Feb. 28, to make an eligible donation that you can deduct this filing season.
But that 2/28 deadline has a tiny bit of wiggle room.
If you charge your donations to a credit card before the end of February, that counts even if you don't get or pay the your credit card bill until next month or later. Personally, I wouldn't wait until Sunday afternoon to try this, as I'd like a little cushion to allow my card company to enter my transaction. I've seen things I've charged, especially by phone or online, show up on my statements a day or so after I actually placed the order.
For you folks who prefer to write a paper check, the IRS says those donations also count for 2009 deduction purposes as long as they are mailed by the end
of February and clear your bank shortly
So don't send a check dated Feb. 28 on March 15 and claim it. We all -- including the IRS -- know how quickly banks take money out of our accounts, so if a tax examiner looks at your statement and sees the check didn't clear until the last half of March, your deduction will probably be disallowed.
Other rules still in effect: And note that all the other usual donation deduction rules remain in force.
The biggie is your filing deduction method. Charitable contributions can be claimed only by taxpayers who itemize. So if you claim the standard deduction, you can't write off any charitable gifts, to Haitian relief efforts or any group.
Next, be sure you gave or will give to a legitimate organization. In addition to being made to a group that's providing assistance to Haiti earthquake victims, it also must be a qualified charity. To make sure the nonprofit is actually an IRS-approved nonprofit, look for it in the agency's online Publication 78 search engine.
Remember, too, that donations to foreign organizations are generally not deductible. So that check you sent to a relief effort that's based in Haiti probably won't be allowed as a deduction.
Documentation rules also are still in effect, meaning you need to keep a records of any deductible donations.
For the standard gifts, a canceled check, bank statement or credit card statement showing the date,amount and group that received the gift are good. For donations by text message, a telephone bill will suffice if it shows the name of the organization, the date of the contribution and the amount you gave.
Of course, the best proof regardless of how you donate is an official receipt from the charity. Most groups provide those nowadays as a matter of course. If you got one, find it now and put it with your tax material so it's handy in case the IRS asks.
And if you were very generous, the IRS requires that you get a receipt. Regardless of what type of contribution you make, to earthquake relief or any other charitable group, if you give cash or property worth $250 or more, you must get written acknowledgment from the charity.
Option, not requirement: Finally, remember that your donation to earthquake relief doesn't have to be claimed on your 2009 return.
If you find that counting your donation on your 2010 return will be better for you tax-wise, then by all means, don't deduct it this year. Just file all the information in connection with your gift (along with this blog post, of course!) and claim it next spring when you file your 2010 taxes.
Who gave what: While Americans have given a lot to help out victims of the devastating quake in Haiti, we are far from alone in our generosity.
The Guardian's DataBlog posted a cool visual analysis, created by David McCandless of InformationIsBeautiful.net, of global donations to the earthquake relief efforts.
As you can see in the excerpt above, the U.S. has given the most dollars ($168 million), but Canada is tops when it comes to the amount given per person ($3.89) and Guyana is the most generous country based on donations as a percentage of its gross domestic product.
- Final word on Haiti donation deductions
- Congress OKs accelerated tax deductions for donations to Haiti
- Red Cross receipts for text donations
- Special tax breaks proposed for Haitian earthquake relief donations
- Craig's wise words about Haiti's crisis
- Alabama tax tidbit (state deduction)
- Year-end Money Moves 2009: Giving
- The 12 Tax Tips of Christmas: #4 Be Charitable
- Keep the giving going
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