Otsego County Community Foundation Donor Information
2011: Final Year for Charitable Tax Credits
Changes to the Michigan tax code signed into law in this year will include elimination of charitable tax credits beginning in 2012. This represents an important opportunity in 2011 for Michigan residents and businesses to make a much-valued contribution to the community that is also supported by the state tax code.
When an individual, family or business invests in an endowed fund with the community foundation, the Michigan Income Tax or Michigan Business Tax codes allow for up to a 50 percent return on that investment.
If an individual contributes $200 or more, the tax credit automatically will equal $100. If filing a dual return, a gift of $400 or more would yield a $200 credit. If a business contributes $10,000 or more, the credit will be for $5,000 or 5 percent of the total tax liability for that business, whichever is less.
For example, a business that has a federal income tax rate of 34 percent and a projected Michigan Business Tax liability of $100,000 gives $10,000 to an endowed community foundation fund and would receive a state tax credit of $5,000 and a federal tax reduction of $1,700 ($10,000 - $5,000 X 0.34 = $1,700). This enables the business to give a $10,000 gift for $3,300.
Gifts and sponsorships to public radio, colleges and universities, libraries and museums, homeless shelters and food banks will also be ineligible for state tax credits after December 31, 2011.
Tax Credit
Giving through the Otsego County Community Foundation to an endowment qualifies you for big savings through the Michigan Community Foundation Tax Credit. Pass-through or Community Temporary Funds, not endowed do not qualify. Example: Married donors, who file jointly, can receive a 50 percent tax credit of up to $200 on a gift of $400 to a permanent endowment fund. A single person can receive a $100 tax credit on a gift of $200. Michigan businesses have the potential to receive up to a $5,000 tax credit (not to exceed 5% of total Single Business Tax) on a gift of $10,000. All contributions are eligible for the federal charitable deduction.