23 September 2005
Washington, D.C., USA:
The United States Congress recently approved a bill that provides tax break not only for Hurricane Katrina victims also for those who volunteer, donate money or open their homes to evacuees. The tax package has been sent to President Bush for his signature. It will provide US$6.1 billion in tax relief for residents and businesses on the Gulf Coast.
Broader provisions targeted at encouraging charitable giving include tax deduction for families who provide housing. Taxpayers who open their homes to evacuees are eligible to deduct $500 per person, up to a maximum of $2,000.
To qualify, one must provide rent-free housing in your principal residence for at least 60 days, says Kathy Burlison, tax analyst for H&R Block. "You can take the deduction for housing displaced members of your family, as long as they're not claimed as dependents on your tax returns," she says.
A higher mileage deduction for volunteers. Volunteers who use their cars to help Katrina-related charities will be allowed to deduct 70% of the IRS standard mileage rate, the rate claimed by taxpayers who use their personal vehicles for business.
The higher rate is limited to volunteer work for Katrina-related charities, Burlison says. The deduction for volunteer driving for other charities is still 14 cents a mile. In addition, the deduction is limited to volunteer work for a recognized charity, Burlison says. "If you're just doing something on your own that isn't sponsored by a charity, that's not going to be deductible."