On January 22, 2010, President Obama signed into law a bill that allows donors to accelerate the income tax benefits of charitable cash contributions for the relief of victims of the earthquake in Haiti. The new law allows individuals who make charitable contributions to aid Haitian earthquake victims to elect to claim an itemized charitable deduction on their 2009 tax return (instead of having to wait until next year to claim the deductions on their 2010 tax return). The election applies only to Haitian relief contributions made in cash after Jan. 11, 2010, and before Mar. 1, 2010. If the election is made, Haiti relief donations are deductible on the 2009 return, not the 2010 return.
While the speed with which our federal government acted and the generosity of the American people in response to this catastrophe are to be applauded, there is also a technology aspect of the American aid response that is worthy of note. On a scale never seen before, Americans provided much needed financial aid in response to a natural disaster through texting. In contrast, telephone-based pledging and web-based pledging have been used widely to raise funds in response to past disasters. In those cases, a credit card was generally used to finance the pledge. This time, a quick and simple text made the contribution with your telephone carrier providing the credit via a charge to your monthly bill. Although many may view texting as common as the air we breathe, this transaction is significant as it represents an ongoing extension of the delivery of technology reducing transactional barriers and enabling significant segments of the population to help others in an immediate and a meaningful way. Of added importance is the pragmatic approach the federal government has taken in response to the current technology of giving. The new law allows a telephone bill to satisfy the recordkeeping requirements to substantiate the federal income tax deduction. Rather than a slow-to-react bill steeped in the traditional requirements imposed for documenting income tax deductions, our federal government embraced the reality of the situation and passed a very sensible, current, and effective piece of legislation.
My appreciation goes to the American people for their selfless charity, and to the U.S. government for getting it right while it matters.
Required Disclaimer: Pursuant to IRS Circular 230, the Internal Revenue Service requires us to inform you that any tax advice included herein is not intended or written to be used, and it cannot be used by any taxpayer for the purpose of avoiding penalties that may be imposed by the IRS on the taxpayer.