How would you like to make a $500 contribution to an eligible Maryland nonprofit and save $450 in taxes? Believe it or not, there is a little known Community Investment Tax Credit (CITC) that can provide these kinds of tax savings. Continue reading below to find out how you can take advantage of these savings.
If you’d like to speak with a Charles Krengel, P.A. representative today for help with the CITC program, call us at (800) 892-9631 or click here to contact us online!
Maryland’s Community Investment Tax Credit (CITC) Program
Maryland’s Community Investment Tax Credit (CITC) program, through a highly competitive process, awards allocations of State income tax credits to 501c(3) nonprofits, which in turn allocate those tax credits to individual and corporate donors. The CITC projects benefit local community projects and services. Businesses and individuals that donate $500 or more to a qualified organization’s approved project(s) can earn State tax credits equal to 50% of the value of the contribution in addition to regular federal and State charitable deductions.
An Example of the Tax Savings We’ve Seen
As an example, suppose an individual in the 33% federal and 8.5% Maryland tax bracket makes a $1000 contribution to an eligible nonprofit under the CITC program. The taxpayer would receive a $500 Maryland tax credit, $330 federal tax savings from the deduction and $85 of Maryland tax savings from the state deduction. The combined tax savings on the $1000 deduction is $915 for a net cost of $85.
Sound too good to be true? It isn’t! Charles Krengel, P.A. has had several clients take advantage of this tax break. There are a number of factors that can impact your tax savings – including your tax bracket and the phase out of itemized deductions for high income taxpayers. The majority of Maryland taxpayers will have tax savings of 70 – 90% of the amount contributed.
Finding an Eligible Maryland Charity
To find a list of eligible Maryland charities, go to the Give Maryland website http://www.mdhousing.org/GIVEMaryland/. If you find an eligible nonprofit which you would like to support, I recommend you call the charity to make sure they have credits remaining. If you decided to make a donation, there is extra paperwork that is needed for your Maryland tax return to verify the contribution.
If you’d like to speak with a Charles Krengel, P.A. representative today for help with finding an eligible charity, call us at (800) 892-9631 or click here to contact us online!
Contact Charles Krengel, P.A.
As you can see, the CITC is a hidden gem if you want to support an eligible nonprofit. If you have any questions, feel free to contact Charles Krengel, CPA.