Haiti Earthquake Donations Can Be Deducted in 2009

A new law was signed on January 22, 2010 by President Obama that allows charitable contributions made for Haiti earthquake relief to be deducted on 2009 tax returns. To qualify, the donations must be cash donations (which includes payments by check, credit card, debit card, paypal, text message, and money order).

General rules for claiming charitable contribution deductions still apply. The donations must be to an IRS approved charity, receipts need to be obtained, and taxpayers must itemize their deductions on Schedule A.

Contributions qualify if they are made after January 11, 2010 and before March 1, 2010. IRS has emphasized that taxpayers can chooose either 2009 or 2010 but not both.

Swiss Bank Accounts?

IRS issued a News Release on August 19 that didn't garner a lot of attention; however, it has the potential to send major ripples through the financial world as we now know it. IRS entered a settlement agreement with the Swiss Bank UBS to obtain information regarding US account holders at UBS. The agreement effectively opens up the same information for all Swiss Bank accounts. Look for a flurry activity as the IRS cracks down on those who have been "hiding" assets with a variety of civil and criminal penalties. There are benefits to coming clean voluntarily and early and Swiss Banks will notify any account holders that they have released information to the IRS. Our recommendation for anyone worried about the potential reporting of their Swiss Bank accounts is to be proactive in approaching the IRS now.

Plan now for Roth IRA conversions in 2010

A unique opportunity looms large in 2010 to convert from traditional IRA's or other qualified pension plans into Roth IRA's (Photo: Sen. William Roth - R Delaware).

Why is 2010 so great?

• The $100,000 income cap will be gone. Anyone can convert.
• Ordinary income recognized from the conversion can be deferred to 2011 and 2012 (1/2 in each year).

Why do I want a Roth IRA instead of a traditional IRA or pension plan?

• Although you pay taxes now, distributions are tax FREE after five years and you reach the age of 59 1/2.
• You are not required to take "required minimum distributions" during your lifetime.

When does it make sense to do this?

• You have a number of years before retirement so that income can compound tax-free.
• You anticipate being taxed at a higher rate in the future than you are now.
• You have the resources to pay the taxes due on the conversion from non-retirement assets.

Savage Esplin & Radmall can help you decide whether this will be a good choice for you.