Tax Benefits
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 IRAs.
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 income tax credits through Endow Iowa
The Endow Iowa Tax Credit Program offers donors who live in Iowa and give through the Community Foundation, generous income tax incentives to make it easier for you to give more for less.
Endow Iowa Tax Credits are claimed fast! Gifts are approved for a tax credit through an application process. The applications are generated by the Community Foundation after an eligible gift is made to an Endow Iowa eligible fund.
The application is then completed by the donor and submitted by their sponsoring community foundation. Applications are
approved by the Iowa Economic Development Authority (IEDA) until all the allcoated tax credits are exhausted. Donors will
receive their tax credit certificate in the mail directly from IEDA. Any outstanding applications may be resubmitted the following
year on a new application.
Important updates to Endow Iowa
In October 2022, the Iowa Economic Development Authority (IEDA) announced important changes related to Endow Iowa. Effective January 1, 2023, a new law exempts Iowa taxation on all “retirement income” for those 55 years of age or older or who are disabled. The law also exempts retirement income received by surviving spouses. Retirement income includes, but is not limited, to 401(k), 403(b) and Individual 401(k) Plan Distributions. This change may impact the income tax liability of some donors and their eligibility to receive an Endow Iowa tax credit. We recommend you consult your tax professional for your own eligibility.
Effective July 1, 2023, the IEDA will no longer maintain a “waitlist” for Endow Iowa Tax Credits. The application process will remain open until all income tax credits have been exhausted. Once the income tax credits have been exhausted for that credit year the application process will close and reopen once the new year’s allocation is released. Applications for donations made within a 12 month period of the open cycle are eligible to apply for an income tax credit.
The program was established to encourage building permanent endowments to benefit communities all across Iowa. Iowa taxpayers may apply for the income 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 percent of the gifted amount.
Individuals are limited to $100,000 in tax credits per year for a $400,000 gift and a couple is limited to $200,000 in tax credits per year for a $800,000 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 income tax credit is received for a gift, no Iowa charitable 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.
Donors who take the standard Federal deduction or who make an Endow Iowa qualified gift as an IRA Charitable Rollover can apply the entire 25 percent credit toward their State of Iowa income tax liability.
Donors who itemize must treat the Endow Iowa Tax Credit as a nondeductible amount of the charitable contribution for federal taxes. For example, a taxpayer who makes a $1,000 charitable donation to an Endow Iowa fund would receive a $250 (25 percent) state tax credit. 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 own tax professionals.