Congress Passes Haiti Aid Bill: Donations Deductible for 2009

As an update to a blog post a few days ago, both chambers of Congress have
now passed legislation enabling taxpayers to claim charitable deductions made
for Haiti aid relief efforts on their 2009 tax returns. The Haiti Assistance
Income Tax Incentive Act passed through the House of Representatives unanimously
yesterday, and quickly moved through a unanimous vote in the Senate on Thursday.
The President is expected to pass the bill into law on Friday morning, January
22.
Under the Haiti act, taxpayers will be allowed to claim charitable deductions
on their 1040 income tax returns for donations made to charities until March
1.

This updates the previous post, reprinted below:

Bipartisan Push on Capitol Hill Would Allow Donations to Quake Relief
to be Applied to 1040 Returns Currently Being Filed
January 18, 2010
By Isaac M. O’Bannon, Technology Editor
In a seemingly rare display of bipartisan effort by both chambers of Congress,
Democratic and Republican leaders in the House and Senate are pushing to quickly
pass legislation that will allow U.S. taxpayers to deduct their Haiti aid donations
on their 2009 income tax returns. The measure is geared at promoting additional
donations to the relief efforts for the island nation, which was stricken with
a magnitude 7.0 earthquake on January 12.
According to a press release issued by House Majority Whip James E. Clyburn
(D-S.C.) and House Minority Whip Eric Cantor (R-VA), the two have introduced
legislation to “allow individuals who make contributions to the relief
effort in Haiti to claim the donations as an itemized charitable deduction on
their 2009 tax return.” They are joined by other influential House leaders,
including Ways and Means Committee Chairman Charles Rangle (D-N.Y.) and the
ranking Republican member on that committee, Dave Camp (R-MI).
“In the midst of this horrific disaster, we must do everything we can
to help the people of Haiti and the aid workers working so feverishly on the
ground to help them,” said Cantor. Congressman Clyburn added: “I am
heartened by the outpouring of concern and resources from the American people
to the crisis in Haiti.” Similar legislation has been proposed in the Senate.
Tax and accounting professionals, as well as the technology companies that
produce tax programs and online preparation systems, are well-accustomed to
last minute tax law changes at the state and federal level. Most programs continue
to offer updates through the end of January to accommodate for these changes.

Fortunately, the proposal to allow deductions made until April 15 for donations
to Haiti relief efforts is not likely to involve significant changes to the
actual tax filing programs used by do-it-yourself taxpayers or professionals.
This is because the IRS will not need to change existing forms, but will likely
issue official guidance to taxpayers and professional preparers. As a result,
many of the technology companies that make tax return programs will likely make
minor changes to their instructions regarding charitable giving. These changes
would be available via program updates. For users of SaaS (web-based) preparation
programs, any changes would be made automatically by the online program developers.
The notion of making charitable donations retroactively deductible to help
promote giving is not new. In early 2005, the U.S. Congress passed similar legislation
following the December 26, 2004, tsunami in the Indian Ocean. That event was
spurred by a magnitude 9.1 earthquake off the coast of the Indonesian island
of Sumatra.
“It’s great to encourage donations for humanitarian efforts, especially
because a lot of people have taxes on their minds right now, so it might encourage
additional giving,” said Jody L. Padar, a Chicago CPA with the firm James
J. Matousek, CPA Ltd. (www.matousekconsulting.com).
“The biggest issue for many taxpayers is to remember not to “double
dip,” or mistakenly take the deduction again in 2010. They also need to
save their receipts.”
Certain advances in technology have also benefited charities and taxpayers.
The popularity of mobile phone text messaging has made it quick and easy for
people to donate funds, with a record of more than $10 million having been contributed
via text message to the Red Cross (www.redcross.org)
during the six days following the disaster. This is in addition to more than
$40 million donated to the organization via other methods. “The cool thing
about texting donations is that taxpayers definitely have documentation of the
donation on their cell phone bill,” said Padar.
To make a text-based donation to Haiti relief efforts, mobile phone users can
can text the word “Haiti” to 90999 to instantly send a ten dollar
donation to the Red Cross. The donation is automatically added to the user’s
billing statement and most major mobile service providers have waived text messaging
fees for those making these donations.
Although the tax season is already officially underway, most taxpayers do not
file until the months of March and April. If the legislation to make Haiti earthquake
relief donations deductible for last year’s taxes does pass, Padar notes that
the few who may have already filed or who remain unaware of the special treatment
will still be able to claim the charitable giving on their 2010 returns or,
if desired, will be able to file an amended 2009 return.