Participating in generosity through the Quad Cities Community Foundation is rewarding (and we’re not just talking about that awesome feeling you get when making a gift to a cause you care deeply about). There are also a number of tax benefits for donors who give through the Community Foundation, including capital gains savings on gifts of appreciated assets and gifting through IRA’s.
We are committed to helping you maximize the tax benefits available to you when you give. The easiest way to learn more is to give us a call to talk about the benefits that fit your unique situation, but below, we offer a glimpse into some of the benefits available to donors.
25 percent tax credits through Endow Iowa
The Endow Iowa Tax Credit Program offers contributors who live in Iowa and give through the Community Foundation generous tax incentives to make it easier for you to give more for less.
The program was established to encourage building permanent endowments to benefit communities all across Iowa. Iowa taxpayers may apply for the tax credit if they make a gift to a permanently endowed fund that supports charitable activities in Iowa. Here’s some specifics:
Tax credits are for 25% of the gifted amount.
Individuals are limited to $300,000 in tax credits per year for a $1.2 million gift and a couple is limited to $600,000 in tax credits per year for a $2.4 million gift (if both are Iowa taxpayers).
An individual or a business creating individual tax liability (partnership, LLC, S Corp., estate or trust) is eligible to receive a tax credit as long as they pay taxes in Iowa. A “C” Corporation may also receive a tax credit under this program.
You can claim the tax credit on your Iowa tax return only. If an Iowa tax credit is received for a gift, no Iowa tax deduction for the same gift is allowed.
If you cannot use the entire credit this year, you can carry it over for up to five years. The tax credit is not transferable.
New IRS regulations effective August 28, 2018, change the deductibility of gifts that claim a state and local tax credit.
Donors who take the standard deduction or who make an Endow Iowa qualified gift as an IRA Charitable Rollover can apply the entire 25% credit toward their State of Iowa tax liability.
Donors who itemize must now treat the Endow Iowa Tax Credit as a non-deductible amount of the charitable contribution for federal taxes. For example, a taxpayer who makes a $1000 charitable donation to an Endow Iowa fund would receive a $250 (25%) state tax credit. With the new regulation, when filing federal taxes, the taxpayer can only deduct the difference between the donation and the state tax credit, or $750 in this example. There is an opportunity to deduct the full value of the gift if you have not reached the $10,000 state and local tax (SALT) cap. We recommend donors consult their tax professionals.
Endow Iowa Tax Credits are claimed fast, and the 2019 tax credits are already spoken for. Applications submitted after the 2019 credits were fully claimed are placed on a waiting list in the order applications are received to request a 2020 tax credit.
What about Illinois?
Illinois has similar legislation pending to introduce Endow Illinois. While it has not yet passed, it does have strong and growing support in the legislature. We will keep you posted on the bill’s progress.