The IRS announced that taxpayers giving contributions to charities conducting earthquake relief work in Haiti can claim these contributions on this year’s tax return. Details are contained in IRS Newswire Issue No. IR-2010-012, dated January 25, 2010. This special Haiti tax relief provision is similar to a 2005 IRS rule that allowed taxpayers to deduct charitable contributions made in January of 2005 to assist those affected by the December 26, 2004, Indian Ocean tsunami, as though they were made in 2004.

This special tax rule, enacted January 22, 2010, states that contributions made after January 11, but before March 10, 2010, can be included in the taxpayer’s itemized deductions on their 2009 income tax return (Form 1040 Schedule A). Only taxpayers who itemize deductions can take advantage of this special tax provision, so those taking the standard deduction or filing Form 1040A (short form) are not eligible for this tax relief.

To qualify under this special tax provision, the contributions must have been made specifically to support relief efforts in Haiti to help those adversely affected by the January 12 earthquake. In addition, the contributions must have been in cash or made via text message, check, credit card or debit card, but the deduction does not apply to contributions of property.

As with all charitable contributions claimed on income tax returns, Federal law requires taxpayers maintain detailed records documenting the contribution. Usually, cash contributions are documented by a receipt, cancelled check or account statement listing the name of the charity, date paid and amount of the contribution. Contributions made by text message can be documented by a phone bill that meets the recordkeeping requirements (i.e. contains the name of the charity, date and amount). “Charitable Contributions” (Publication 526) provides detailed information on making and documenting charitable contributions.

To ensure contributions are made to qualified charities, taxpayers should review the online database on the IRS website (see: “Search Charities”) and check with USAID or other U.S. government agencies that will know what organizations are providing Haiti earthquake relief. Even though some churches and governments are not listed in the IRS website, they could be qualified charities. Foreign organizations are usually not considered qualified charities, therefore, contributions made to such groups are generally not deductible.

Taxpayers may take the deduction for such contributions on either their 2009 or 2010 tax returns, but not on both returns. In fact, if a taxpayer files their 2009 tax return early, including the deduction for qualified contributions to Haiti relief work, uses electronic filing and selects the direct deposit option, they will receive their refunds in as little as 10 days. Refunds can be directly deposited to savings, checking or brokerage accounts or used to buy Series I U.S. Savings bonds.

IRS Commissioner Doug Shulman said, “Americans have opened their hearts to help those affected by the Haiti earthquake. This new law provides an immediate tax benefit for the many taxpayers who have made generous donations.”

Taxpayers should consult with CPAs, professional tax preparers or other tax practitioners for advice concerning their specific tax situation.

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