IRS announces Disater Relief help for Midwest

New Law Encourages Cash Donations for Midwest Disaster Relief

Taxpayers who make qualifying cash contributions for disaster relief efforts in the Midwest could benefit from a recently passed law that suspends the percentage-of-income limits that would normally apply when taxpayers deduct the contributions on their 2008 federal tax returns.

Under the Heartland Disaster Tax Relief Act, an individual taxpayer who itemizes deductions may choose to deduct qualifying cash contributions up to 100 percent of his or her adjusted gross income, reduced by deductions for other charitable contributions. Similarly, an electing corporation may deduct qualifying cash contributions up to 100 percent of its taxable income, reduced by deductions for other charitable contributions.

Cash contributions qualify for this special treatment if they are made to a public charity for disaster relief efforts related to certain areas in Arkansas, Illinois, Indiana, Iowa, Missouri, Nebraska or Wisconsin. The areas must have been declared federal disaster areas on or after May 20 and before Aug. 1 of this year as a result of severe storms, tornados or flooding, and the areas must have been designated to receive individual assistance from the federal government because of the damage resulting from the disasters.

The contributions must be made no later than Dec. 31, 2008. “Cash” includes payments made by check or credit card. Qualifying cash contributions do not include payments to a supporting organization as described in section 509(a)(3) or for the establishment of a new, or maintenance of an existing, donor-advised fund.

Qualifying cash contributions of more than the amount allowed as a deduction can be carried over and deducted in succeeding tax years, subject to the normal limits. To substantiate the deduction, a taxpayer must obtain from the charity a written acknowledgment that the contribution was or will be used for relief efforts related to one or more of the Midwestern disaster areas.

In addition, deductions by individuals for qualifying contributions are not treated as itemized deductions for purposes of the overall limitation on itemized deductions. This means that, for taxpayers with higher adjusted gross incomes, the deduction for these qualifying contributions is not limited the way other itemized deductions are limited.

For other tax help go here.

Tax Relief in Disaster Situations

Updated Sept. 12, 2008
The IRS is providing taxpayers affected by Hurricane Ike with seven extra days to file individual estimated taxes and corporate taxes due Monday, Sept. 15. The agency is continuing to monitor the impact of Hurricane Ike along the Gulf Coast.

Tax relief is now available to victims of Hurricane Gustav in Louisiana. Certain filing and payment deadlines have been postponed until Jan. 5, 2009. See the news release for more details.

With an active hurricane season underway, the IRS recommends that taxpayers in vulnerable areas take steps now to protect their tax and financial records. For further information on hurricane recovery, visit the Federal Emergency Management Agency hurricane response page.
The Housing and Economic Recovery Act of 2008 offers a new option to homeowners who previously claimed a casualty loss deduction resulting from hurricanes Katrina, Rita and Wilma. Details on filing amended returns will be available in the near future. See revised questions and answers for more information.

Recent Tax Relief
• Relief for Hurricane Gustav Victims in Louisiana, see News Release
• Relief for Victims of Tropical Storm Fay in Florida, see News Release
• Relief for Victims of Hurricane Dolly in Texas, see News Release
• Special Relief for qualified recovery assistance property placed in the Kansas disaster area, see Notice 2008-67
• Special Help for Greensburg, Kan., Tornado Victims, see News Release
• Don't See What You're Looking For? Around the Nation contains links to previously issued disaster relief.
• NEW: For Forms, Publications, FAQs and General Information See Disaster Assistance and Emergency Relief for Individuals and Businesses.
• Ayuda por Desastres Paginas en espanol
• Tax Relief for Hurricane Katrina, Rita and Wilma Victims The IRS offers tax assistance to victims of the 2005 Gulf Coast hurricanes.