Update on 2010 Charitable Contributions

Congress has passed the Haiti Charitable Deduction Bill (H.R. 4462) that permits taxpayers to make an election to deduct cash charitable contributions on their 2009 income tax return for Haiti relief donations made after January 11, 2010 and before March 1, 2010.  Normally cash donations are deductible in the tax year made.  Be sure to let your tax preparer know if you made a donation and would like to make the election.  You will need to keep track of these donations so that if the election is made, the deduction is not again claimed on your 2010 income tax return.  The election can make sense if your marginal 2009 income tax rate will be equal to or greater than your expected 2010 marginal income tax bracket.

Many taxpayers used the provision allowing individuals aged 70 1/2 and older to donate up to $100,000 from their individual retirement accounts (IRAs) and Roth IRAs to public charities without having to count the distributions as taxable income.  This provision expired on December 31, 2009.  The U.S. House passed a tax extenders bill on December 9, 2009 to extend this provision through 2010.  However, the U.S. Senate has not yet taken up a tax extenders bill.  Therefore, this popular provision is not currently available, but may be restored if the Senate acts upon it later this year.