At least one tax expert is advising certain taxpayers to wait until next year to claim a deduction for their charitable contributions for Haiti earthquake relief.
Congress recently passed legislation allowing the deductions to be claimed this tax season (see
For 2009, high-income taxpayers can lose some of the value of their itemized deductions, he warned in a press release from CCH. For 2010, that potential limitation doesn't apply, although it may be reinstated for 2011 and future tax years.
He believes the new law, and the IRS guidance, may also set a new precedent for the kind of substantiation that the IRS will accept in the future for charitable contributions (see
Instead, individuals who make a cash contribution for Haiti earthquake relief through their cellular telephones via text message can substantiate it with their telephone bill, rather than a document from the charity. The telephone bill must show the name of the charitable organization, the date of the contribution and the amount of the contribution.
The exception indicates that Congress may have made the law for some cash contributions too restrictive, with the language of the statute denying a deduction for contributions that are clearly legitimate and verifiable. The IRS has already said that it will accept payroll records and pledge cards as substantiation for charitable donations made through payroll deductions, even though these don't meet the exact requirements of the new law.
Perhaps the exception made for Haiti earthquake relief will be expanded to other situations in which there is a third-party record that a donation has taken place, even though the record comes from a store, not the charitable organization, such as donations to literacy programs or food pantries made by adding a few dollars to your bill at the bookstore or grocery, Luscombe said in a statement. This may come through an IRS ruling or from clarifying legislation, but I think it will come one way or another.