ARE YOU GATHERING TAX DOCS FOR TAX SEASON! HERE’S SOMETHING YOU SHOULD KNOW. FEEL FREE TO PASS THIS AROUND TO YOUR CONTACTS! February 2010

Dear Client:

On 1/22/10, President Obama signed into law “A Bill to Accelerate the Income Tax Benefits for Charitable Cash Contributions for the Relief of Victims of the Earthquake in Haiti” (the Haiti Relief Act).

The Haiti Relief Act allows taxpayers to treat charitable contributions of cash made after 1/11/10 and before 3/1/10 as contributions made on 12/31/09, if the contributions were for the purpose of providing relief to victims in areas affected by the earthquake in Haiti that occurred on 1/12/10.

To qualify for this accelerated deduction:

• You must itemize your deductions for 2009. If claiming the standard deduction in 2009, you are not eligible.
• The donation must be made in cash. This includes contributions made by text message, check, credit card, or debit card.
• The donation must be made specifically for the relief of victims in areas affected by the 1/12/10 earthquake in Haiti.
• The donation must be made after 1/11/10 and before 3/1/10. A check mailed before 3/1/10 will qualify for the 2009 deduction even though the charity doesn’t cash it until after that date. Ditto for a contribution charged to a credit card before 3/1/10.
• The donation must be made to a qualified charity and cannot be designated for the benefit of specific individuals or families. Contributions made to foreign organizations generally are not deductible. Information about organizations helping Haitian earthquake victims from agencies such as the U.S. Agency for International Development can be found at www.usaid.gov

Also, the normal substantiation rules must generally be met. However, for donations of less than $250 made by text message, a telephone bill will meet the recordkeeping requirement if it shows the name of the donee organization, the date of the contribution, and the amount of the contribution. For example, in the case of a charitable contribution made by text message and chargeable to a telephone or wireless account, a bill from the telecommunications company containing the relevant information will satisfy the recordkeeping requirement. For other cash contributions, a bank record, such as a cancelled check, or a receipt from the charity showing the name of the charity and the date and amount of the contribution will generally be required. However, gifts of $250 or more will require additional documentation.

Bottom Line: If you are contemplating making a contribution to help victims of the earthquake in Haiti, you should consider doing so before 3/1/10. That way, during tax time you will have the option of deducting the contribution in either 2009 or 2010, whichever produces the greater tax savings.

Please give us a call if you have any questions or need any assistance.

Very truly yours,

Brian Berlage

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