Congress recently passed a law permitting taxpayers to claim a deduction on their 2009 tax return for contributions to charities providing earthquake relief in Haiti made before March 1, 2010. Under prior law, donations made following the January 12 earthquake would not be eligible for a deduction until the donor files their 2010 tax return. The new legislation gives donors the choice of claiming the deduction in 2010 or 2009.
Only contributions of money qualify (whether made by cash, check, credit or debit card, text message, or other means). The new law specifically permits donors to retain a phone bill indicating a text message donation to serve as sufficient proof of the contribution. This is good news as it is the first official guidance on documentation of donation by text message. In-kind contributions of clothing, food, building materials, medical supplies, or other property are not subject to the early deduction option.
To take advantage of the early deduction option, donors must have a receipt from charities to whom they gave $250 or more. Because donors must receive the receipt on or before the day they file the tax return, charities providing earthquake relief should make a special effort to provide receipts to their donors before April 15th. As a refresher, the written receipt must include:
* The date of the donation
* The amount of cash contributed
* An affirmative statement whether any goods or services were given in return of the contribution
* A description and good faith estimate of the value of any goods or services given in return for the donation.