Congress Approves Extension of Tax Deduction for Tsunami Donations

January 7, 2005

Congress on January 6 unanimously passed a bill (HR 241) that permits accelerated tax deductions for charitable cash donations made to assist victims of the recent tsunami. The legislation will now head to President Bush for his signature.

Specifically, the bill allows taxpayers to claim a tax deduction in tax year 2004 for donations made for tsunami disaster relief until January 31, 2005. Under current law, taxpayers would have to wait until next year's filing season to claim a tax deduction for tsunami-related gifts made after December 31, 2004. The proposal is limited to cash gifts made specifically for disaster relief.

The bill was approved in the House by unanimous consent and was sponsored by House Ways and Means Committee Chairman William M. Thomas, R- Calif., and co-sponsored by ranking member Charles B. Rangel, D-N.Y. The Senate deemed it passed following House approval. Senate Finance Committee Chairman Charles E. Grassley, R-Iowa, and ranking member Max Baucus, D-Mont., sponsored the bill in the Senate. Sens. John McCain, R-Ariz. and Hillary Rodham Clinton, D-N.Y., were co-sponsors.