Special Iowa Charitable Credits

I spent quite a bit of time in December talking about charitable contributions and the deductions that taxpayers can take for those contributions.  Today, I’m going to talk about several tax credits that are available for certain charitable contributions made by Iowans. 

School Tuition Organization Tax Credit
Certain donations made to “School Tuition Organizations” may be eligible for a credit of up to 65% of the donation.  This credit is for contributions to qualifying private-school tuition organizations.  Chances are, you’ll only consider taking this credit if your child attends a private school.  The school tuition organization will issue you a certificate, which must be attached to your tax return when you claim the credit.

Endow Iowa Credit
Donations made to certain community foundations in Iowa can be eligible for a tax credit of 25% of the donation.  The credit is non-refundable but any unused credit in the current year can be carried forward for up to 5 years.  This credit is administered by the Iowa Department of Economic Development and you have to file forms with them in order to claim it.  It is probably best to talk to a tax advisor before trying to claim this credit.

Charitable Conservation Contribution Credit
This credit definitely requires some planning and thought before it is claimed.  Iowans who donate land to a qualified organization for conservation purposes (such as donating land to a county conservation board) can claim a credit of up to 50% of the fair-market value of the land.  The maximum credit allowed is $100,000.  The credit is nonrefundable but any unused credit in the current year can be carried forward for up to 20 years.  It should be noted that the donation of land for conservation purposes is NOT always better than a sale of the land, in terms of net “cash in hand” after the transaction, even with the credit.  For this reason, it’s important to talk to your tax advisor about your goals to make sure the transaction accomplishes what you want it to accomplish.