Monday, February 15, 2010

TAX BREAKS FOR HAITIAN EARTHQUAKE RELIEF

The recent earthquake in Haiti reminds us all to count our blessings. Even in today's lousy economy, Americans are finding ways to give generously to ease the disaster - and Congress just gave us one more.

Here are some tips for making the most of your earthquake relief donations:
  • You can deduct up to 50% of your adjusted gross income for cash gifts to 501(c)(3) organizations or public charities working for earthquake victims.
  • If you give more than $250, you'll need a written receipt dated no later than the filing date of your return.
  • Gifts of clothing, furniture, electronics, and household items are deductible at fair-market value, such as the price they would bring at a resale shop. Keep track, you might be surprised how much you save!
  • Congress and the IRS have cracked down on inflated car and truck deductions. If you give away a vehicle, you can deduct its fair market value only if the charity uses it for "tax-exempt" purposes (such as a church using a van to drive parishioners). If the charity sells the vehicle, your deduction is limited to the charity's actual proceeds.
  • Washington has just passed special legislation letting you take a 2009 deduction for contributions of cash (but not property) on behalf of earthquake relief you make before March 1, 2010. That new law also eases recordkeeping requirements for such "accelerated" deductions, especially for those you make by phone. If you give by text message, for example, your phone bill satisfies the new requirements if it shows the recipient, date, and amount of the contribution.

As always, the IRS and Better Business Bureau caution you to seek out qualified charities.

Larry Kopsa CPA