Running a Firm
Haiti Relief Efforts; Tax Deductions Outline E-mail
Written by The Progressive Accountant   
Wednesday, 27 January 2010 13:01

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HaitiThe effort to aid victims of the Haitian earthquake is bringing contributions from companies of all kinds, efforts that are being made easier by a law that enables taxpayers who make cash contributions to a qualified charitable organization between Jan. 11, 2010 and before March 1, 2010 to deduct these from 2009 income. Among the organizations offering aid in the tax and accounting marketing is the American Institute of CPAs which is encouraging members to contribute to the AICPA’s CPAs in Support of America Fund, which will accept contributions through March 15. Liberty Tax Service is offering donations for each return prepared at Liberty Tax locations with several offices holding fundraising benefits. Liberty has also partnered with Stop Hunger Now, an international relief organization founded by John Hewitt, Liberty’s CEO and co-founder. Stop Hunger Now is accepting large in-kind donations, including bottled water, food, medical and other life-saving items at its warehouse locations.

Microsoft has made an initial commitment of $1.25 million, including cash and in-kind contributions. With the company matching employee donations up to $12,000 per employee, more than 3,700 Microsoft employees have donated more than $1.3 million, along with the corporate match, to 175 relief organizations. Microsoft is partnering with the Red Cross to facilitate donations. Donors can text Haiti to 90999 in order to automatically donate $10 to the Red Cross, which will be charged to the wireless bill. The company has also donated technoloogy to the effort.

But no matter whichcharitable organization individuals use, the law’s provisions are something that taxpayers need to understand. A CCH tax briefing notes that taxpayers have the option to have contributions as deductions for 2009, but notes that they can also claim the deduction on 2010 returns. The briefing also reminds them the same contribution cannot be deducted in both years. The CCH report noted that additional tax incentives for helping Haitian victims may be on the way.

Qualifying contributions must be made in cash, including payments via cash, check, credit card, debit card or text messages. Contributions of marketing securities or other property cannot be accelerated while the law does not waive the normal percentage
limitation and carryover rules for charitable deductions.

Donations must also be made to domestic charitable organizations. Contributions to foreign relief organizations without U.S. affiliations are not deductible and similarly, contributions to specific families or individuals are not deductible.

Qualifying contributions must be made to a domestic charitable organization that is assisting Haiti. Under the Internal Revene Code, as long as a U.S. charity collects the funds and has full control and discretion over them, use of the funds outside the U.S. is irrelevant for charitable deduction purposes. Contributions to foreign relief organizations without a U.S. affiliation are not deductible. Similarly, contributions to benefit specific individuals or families are not deductible.

Contributors must substantiate their donations, generally through a bank record or a written communication from the charitable organization that shows the name of the charity and the date and amount of the contribution. Contributions by cell phone can be substantiated via a telephone bill that shows the name of the charitable organization, and date and amount of contribution.



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