Get tax break for tsunami donation
By Sandra Block
USA Today
Like millions of Americans, Rob Johanson of Westlake Village, Calif., felt compelled to help victims of the Indian Ocean tsunami. But while others were just beginning to grasp the enormity of the disaster, Johanson, a certified public accountant, was writing checks. He mailed his contributions on Dec. 31 to ensure they would be deductible on his 2004 returns.
Find lists of legitimate tax-exempt charities at:
Now, donors who didn't get their checks in the mail by year's end have been given another chance. Last week, President Bush signed into law a bill that allows taxpayers to deduct contributions to tsunami relief efforts on their 2004 tax returns, as long as the money is donated by Jan. 31.
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That means taxpayers who make charitable contributions this month won't have to wait until next year to deduct them.
Supporters of the rule change hope it will encourage more people to contribute to tsunami-related relief efforts.
In a USA Today/CNN/Gallup Poll survey conducted over the weekend, more than 40 percent of Americans said they had thought about donating to tsunami relief efforts but haven't yet done so.
You don't need a special form to claim the deduction when you file tax returns. As long as you send in your check by the end of the month, the contribution "will be treated just like it was still 2004," IRS commissioner Mark Everson said Monday.
There are, however, some details you should be aware of before you start writing checks. Among them:
• The charitable contribution must benefit victims of the Dec. 26 tsunami.
To ensure your donation qualifies, contribute to a charity that has established a designated fund for tsunami victims, suggests Yasmin Causer, a financial planner for Cabot Money Management in Salem, Mass.
Make sure the charity is a tax-exempt U.S. organization. Direct contributions to foreign charities may not qualify, even if they're involved in tsunami relief efforts.
To find legitimate, tax-exempt charities involved in tsunami relief, check out www.usaid.gov, the Internet site for the U.S. Agency for International Development. Click on "Tsunami Relief" for a list of agencies assisting in the relief and recovery effort. You can also find a list at www.usafreedomcorps.gov.
• You must donate money.
Contributions of canned goods and clothing don't qualify for the special deduction. Which is just as well, because most relief agencies prefer monetary contributions.
• Pledges don't count.
To qualify for the deduction on your 2004 tax returns, you must mail your check or charge your donation on your credit card by Jan. 31. Simply promising to contribute at some later date won't cut it, says William Massey, senior tax analyst for tax publisher RIA.
• The extended deadline is optional.
If you donate to a tsunami relief agency this month, you can deduct the contribution on your 2004 tax returns, or wait and claim it when you file for 2005, Massey says.
Just make sure you don't inadvertently claim the same deduction on your 2004 and 2005 returns.
You can find more information about charitable contributions in IRS Publication 526. It's available at www.irs.gov.
