With just over one month until individual income taxes must be filed with the IRS, Congress is yet again considering a last-minute change to tax laws that will only further complicate the preparation of 2009 income tax returns.
Following the earthquake in Chile, the chairman of the House Ways and Means Committee introduced legislation that would allow taxpayers to deduct on their 2009 income tax returns donations made in 2010 for Chilean earthquake relief. Congress took the same action in response to the earthquake that struck Haiti earlier this year.
When Congress makes last-minute changes like this, their action only further complicates an already mind-boggling system of taxation. Is it any surprise, then, that most Americans rely on professional tax preparers to file their annual income tax returns?
While the motivation may be noble—to encourage charitable contributions to aid those affected by natural disaster—the taxpayer ultimately sees no benefit from such a change. This is because deducting the donation in 2009 simply means it won’t be deducted in 20101.
In the end, if a taxpayer planned on donating to earthquake relief regardless of Congressional action, professional tax preparers are the only individuals who benefit from this legislation.
- The legislation also assumes that the taxpayer isn’t taking the standard deduction, but instead itemizes. In many cases, filers who don’t own a home or incur significant medical expenses receive a greater benefit from the standard deduction. ↩