ND State Tax Credit for Endowment Gifts
If your clients are North Dakota taxpayers, they may be eligible to claim a credit of 40% on a minimum donation of $5,000 to a qualified endowment at the Community Foundation through the North Dakota Charitable Income Tax Credit. This is on top of the savings they receive on their federal tax return by itemizing their qualifying charitable donations. By taking advantage of both the state tax credit and the federal tax deduction, your clients can significantly lower the net cost of their contribution and triple its impact.
All of the Community Foundation's endowment funds qualify for this tax credit!
Individuals may receive a state tax credit for a contribution for $5,000 or more (lump sum or aggregate in one year) to a qualified North Dakota endowment. The tax credit is 40% of the charitable deduction allowed by the IRS up to a maximum credit of $10,000 per year per taxpayer or $20,000 per year per couple filing jointly. Effective for taxable years starting in 2011.
Example: Mr. Jones, a North Dakota resident, donates $20,000 in cash to an endowment fund at the Community Foundation. He receives an $8,000 tax credit (40%) on his North Dakota return. If he is in the 28% federal tax bracket, his federal tax savings is $3,360 (28% of $12,000). The "cost" of his $20,000 gift is offset by $11,360 in tax savings.
Businesses (C corporations, S corporations, estates, limited liability companies, trusts, and financial institutions) that pay ND income tax may take a 40% credit up to a total of $10,000 for gifts to the qualified endowment fund of a qualified North Dakota charity. Effective for taxable years starting in 2011.
In all of the above, the credit may be carried forward for 3 additional tax years if it cannot all be used in one year.
