Haiti Relief Workers Qualify for Combat Zone Extension

In a new IRS press release, the IRS announced that Haiti relief workers would qualify for combat zone tax deadline extensions. Along with military personnel and designated civilians, Haiti relief workers are now being given an additional 180 days to file returns and pay any taxes due.

Deadlines for taking care of a variety of federal tax matters are automatically extended for persons serving in a combat zone or a contingency operation. Operation Unified Response is a contingency operation, thus giving designated persons providing earthquake relief in Haiti the same extensions that are available to military and support personnel serving in Iraq, Afghanistan, and other combat zone localities.

This relief applies to members of the military, Red Cross personnel, accredited correspondents, and civilian support personnel acting under the direction of the Armed Forces. In most cases, the relief also applies to spouses.

Normally, eligible taxpayers have at least 180 days after they leave the combat zone or contingency operation area to take care of various tax-related matters. For Operation Unified Response and the Haiti earthquake, these tax-related matters include:

• Filing a 2009 federal income tax return,
• Paying tax due for 2009,
• Making a 2009 IRA contribution, and
• Making a quarterly estimated tax payment for 2010

Check out the full release at IRS.gov….

House Votes for Faster Tax Breaks for Chile Gifts

The House of Representatives passed a bill today that would allow taxpayers to deduct Chile relief donations made by April 15th on their tax returns. The non-controversial bill, which should easily sail through the Senate, would also extend the deadline for Haiti donations to April 15th. Check out the following article on the new development courtesy of the Associated Press.

Under current law, donors would have to wait until next year, when they file their 2010 returns, to claim the deductions. The House bill would allow donations made by April 15 to be deducted on 2009 returns.

The House passed the bill Wednesday on a voice vote, with no opposition. It now goes to the Senate. Congress passed a similar bill for donations to Haiti quake victims made before the end of February. The bill would extend the deadline for Haiti donations until April 15 as well.

The House has passed a bill that would allow taxpayers to write off charitable donations to Chile earthquake relief efforts when they file their 2009 taxes this spring.

Under current law, donors would have to wait until next year, when they file their 2010 returns, to claim the deductions. The House bill would allow donations made by April 15 to be deducted on 2009 returns.

Questions for the Tax Lady: March 8th, 2010

Check out the following new Questions for the Tax Lady answers and feel free to ask me questions through one of the links below. You can send me an email, direct message or @ reply, and I will do my best to get an answer for you!

Question #1: Can I still make donations to Haiti that can be counted on my 2009 tax return?

Unfortunately, no. The deadline to make deductions that can be counted on your 2009 tax return was February 28^th. However, if you have any extra money then you should still consider making a donation; you can claim the deduction on your 2010 return. To learn how you can make a contribution checkout this article on the top 10 options for donating to the Haitian relief efforts.

Question #2: If my husband and I start a new business can we classify it as a sole proprietorship or do we need to form a partnership?

You and your husband can classify the business as a sole proprietorship as long as you meet the following IRS conditions:

1. The only partners in the partnership are a husband and wife

2. They file a joint tax return

3. The husband and wife must materially participate in the trade or business.

4. Both spouses must elect qualified joint venture status on Form 1040 by dividing the items of income, gain, loss, deduction, credit and expenses in accordance with their respective interests in such venture and each spouse filing a separate Schedule C, C-EZ, or F accordingly, and, if required, a separate Schedule SE to pay self-employment tax.

For more information see Election for Husband and Wife Unincorporated Businesses.

Questions for the Tax Lady: February 8th, 2010

Check out the following new Questions for the Tax Lady answers and feel free to ask me questions through one of the links below. You can send me an email, direct message or @ reply, and I will do my best to get an answer for you!

Question #1: When is the deadline for making donation’s to Haiti relief funds that can be included as charitable contributions on my 2009 return?

According to the IRS contributions of cash made after January 11, 2010 and before March 1, 2010, can be treated as contributions made on December 31, 2009 if such contributions were for the purpose of providing relief to victims in areas affected by the earthquake in Haiti that occurred on January 12, 2010. To be safe, you should try to make any donations that you plan to include on your tax return as soon as possible.

Question #2: What items should I bring with me when I take my tax return in to have it prepared?

I actually posted a blog entry on this very topic a few weeks ago. You can find the detailed list here, but essentially you will want at least the following items:

1. Identification

2. Last Years Tax Return

3. Documentation from ALL Sources of Income

4. Self Employment Documents

5. Financial Gain or Loss Statements

6. Mortgage and Real Estate Taxes

7. Automobile and DMV Documents

8. Deductible Expenses Receipts

9. Additional Deduction Documentation

10. Anything Else your Tax Professional Wants

House Votes for Faster Tax Breaks for Haiti Gifts

Yesterday, the U.S. House of Representatives voted unanimously to approve a bill allowing taxpayers to write-off donations made to Haitian relief efforts on their 2009 tax returns. According to this article from the Washington Post, the Senate is expected to act quickly on the popular legislation.

Under current law, donors would have to wait until they file their 2010 returns next year to take the deductions. But the newly advanced bill would allow donations made by the end of February to be deducted from 2009 returns.

The bill passed on a voice vote with no opposition. Quick Senate action is expected. A similar law was enacted in 2005 for donations to victims of the Indian Ocean Tsunami in December 2004.

"It's a simple gesture but it will encourage giving in this challenging economy," said Rep. Earl Blumenauer, D-Ore.

Last week's quake killed an estimated 200,000 people in Haiti, left 250,000 injured and made 1.5 million homeless, according to the European Union Commission. A powerful aftershock caused even more damage Wednesday.

10 Ways to Make Tax Deductible Donations to Haiti

Yesterday, Haiti was sadly struck by another earthquake. As we have all heard in the news, the island was devastated by a series of massive earthquakes on January 12^th. The disaster left thousands of Haitians injured or dead, and the relief efforts have encountered all types of problems. There are dozens of organizations working to provide assistance to the people of Haiti, and to help encourage all my readers to make a donation I have put together the following list of ways to contribute as well as a brief explanation of how you can deduct the contributions from your taxable income next year.

Donations are Tax Deductible

With tax season beginning, finances are probably on everyone’s mind. Keep in mind that all charitable contributions are tax deductible. Reach into your pockets a little deeper to donate as much as you can to the relief efforts. Just make sure that you keep records of your donations for next tax season.

Top 10 Ways to Make a Donation

1. Cell Phone Donations

If you cannot afford to make a sizeable donation to the relief efforts then you can make a small and easy donation from your cell phone. You can text HAITI to 90999 to donate $10 to the American Red Cross, or text HAITI to 25383 for a $5 donation to the International Rescue Committee. You will see the charge on your next phone bill, so be sure to keep it stored with your other tax documents.

2. Larger Donations to the Red Cross

If you want to donate more then $10 to the Red Cross, and do not have time to send a dozen text messages, then you can use a credit card to donate either over the phone (1-800-REDCROSS) or by visiting their website. If you would like to mail a check then you can send it to the American Red Cross, P.O. Box 37243, Washington, D.C. 20013.

3. Clinton Bush Haiti Fund

In a sign of bipartisan support for Haiti, former presidents Bill Clinton and George W. Bush setup the nonprofit Clinton Bush Haiti Fund. As of today, the fund claims to have received over 126,000 contributions. You can donate through their website, or text QUAKE to 20222 to make a $10 donation through your phone. You could also mail donations to The Clinton Bush Haiti Fund, c/o William J. Clinton Foundation, Donations Department, 610 President Clinton Avenue, Little Rock, AR 72201.

4. Music for Relief

To encourage younger generations to donate, popular music artists including Linkin Park, Dave Matthews Band, Alanis Morissette, the All-American Rejects, Enrique Iglesias and other teamed up with Music For Relief. Their site offers a free music download, but prompts users to make a donation after downloading.

5. UNICEF

UNICEF works in over 150 countries to provide children with nutrition, education, and emergency relief. To encourage taxpayers to donate the U.S. Fund for UNICEF is “absorbing all associated administrative costs so that 100% of every dollar you give to the U.S. Fund for UNICEF will support UNICEF's relief efforts for children in Haiti.” To donate check out this link on their website, or call 1-800-4UNICEF.

6. National Nurses United

Over 10,000 nurses have reportedly already volunteered to go to Haiti to work with relief organizations. However, National Nurses United still needs more funding to send them to Haiti. You can make a donation through their website, with all proceeds going directly to the fund to send nurses to Haiti.

7. AmeriCares

AmeriCares is a nonprofit organization that provides disaster relief by supplying medicine and medical supplies to victims. They have already sent over $6 million worth of supplies to Haiti, and are actively seeking more donations. You can make a contribution by dialing 1-800-486-HELP or visiting AmeriCares.org.

8. Doctors Without Borders

Another nonprofit group that has been active in Haiti is Doctors Without Boarders. They are using funds to repair hospitals and send doctors to create temporary emergency centers to treat victims in Haiti. Go to Donate.DoctorsWithoutBorders.org and you can make a donation from $35 all the way up to $10,000.

9. World Water Relief

Sadly, clear water is scarce in Haiti and the people need clean water not only for drinking, but also for sanitation and medical treatment. World Water Relief has already sent a team with 18 self-sustaining portable water flirtation units to Haiti, and they are already planning their next effort. 100% of donations go to the cost of sending water systems to Haiti, and you can help by making a donation through their website.

10. Hope for Haiti Telethon

Tomorrow (Friday, January 22) actor George Clooney is hosting the Hope for Haiti Emergency Fundraising Telethon from 8 to 10 pm. Guests will include Mary J Blige, Robert Pattinson, Justin Timberlake, Christina Aguilera, Zac Effron, and many others. The telecast will air on ABC, CBS, NBC, FOX, CNN, BET, The CW, HBO, MTV, VH1 and CMT, without commercial interruption. You can tune in, and make a donation over the phone using your credit card.