Tax and financial advice from the Silicon Valley expert.

Tax break for Haiti donations will end soon

President Obama has approved Public Law 111-126, H.R. 4462 allowing taxpayers to choose to deduct certain donations made during 2010 for relief to Haiti relating to the earthquake on January 12, 2010 on their 2009 federal income tax returns.

California has not conformed to this federal tax law.

In order to qualify, the donation must be of cash to a U.S. charity specifically for Haiti relief.  The American Red Cross web site where you can make a donation is

The donation must be made after January 11, 2010 and before March 1, 2010 in order to qualify for the election.

In addition to the usual way of documenting donations with a cancelled check and qualified receipt, individuals who make donations using their cell phones can document their donations using ther telephone bill.  The bill must show the name of the charitable organization, the date of the contribution and the amount of the contribution.

Individuals and corporations are both eligible to make the election.

Remember that you have to itemize deductions in order to get a tax benefit from charitable contributions.  If you claim the standard deduction, you won’t receive a tax benefit.

Higher income taxpayers have part of their itemized deductions phased out for 2009, but not for 2010.  They might receive a bigger tax benefit by not making the election and deducting the donation on their 2010 income tax return.

No double dipping!  The donation may only be deducted on an income tax return for 2009 or 2010, not both!

Since the election is only available for donations up to February 28, 2010, there is just over a month left before this tax benefit expires.

IRS Circular 230 Disclosure:
As required by U.S. Treasury Regulations, you are hereby advised that any written tax advice contained in this communication was not written or intended to be used (and cannot be used) by any taxpayer for the purpose of avoiding penalties that may be imposed under the U.S. Internal Revenue Code.

Tax and financial advice from the Silicon Valley expert.