(Updated to reflect new Idaho limits!)
Today I got an e-mail soliciting donations for the college I attended (Go Vandals!). It is asking for a pledge of $1,000 for the coaching excellence fund. Someone asked me how this effected their taxes, so I thought I would pass out the analysis for all you to ponder:
In the state of Idaho we have a credit for donations to educational entities in the amount of $250 for a $500 donation for a single person ($500 for a $1000 donation/married). The credit is not excluded from your itemized donations, so you get a double benefit from the donation (if you itemize your deductions). If your effective tax rate (married) is 25% (married AGI of greater than 67,900 less than $137,050, single $33,950-$82,250), you will have a reduction in taxes of $750 (married), or $500 (single). The number goes up slightly if you are above $137,050/$82,250. You can maximize the credit and tax savings as a married couple by giving $1000 a year (tax savings of $300 for 25% bracket). There would also be about a $70 state tax savings.
So what this is saying is that you can donate to most schools (the way the credit is worded, most schools or school organizations are covered), and effectively donate $1000 to the school and only be out of pocket around $180 (married) or donate $500 and only be out of pocket about $90 (single). Many employers have a policy (I know the two big accounting firms I worked for did) that they will match your donation, up to a certain amount. If this is the case, your $180 just donated $2000 to your school.
In Idaho we have another similar credit for donations to youth and rehabilitation facilities. The cool thing about this credit is that (with several of the entities) you can donate in-kind, or donate all the stuff that is sitting in your garage or storage area that you will never use. My wife and I have a policy, "get-one, donate-one." So whenever I get new clothes, I donate something. I keep a bag in my closet, and fill it as new clothes are purchased. Before the end of the year, I itemize the bag, give each item a value, and drop it off at the Idaho Youth Ranch (get a receipt). You want to donate (at least) $200 single /$400 (married) worth (thrift-store price) of stuff to maximize the credit. You get the exact same benefit (donate $200 single/$400 married get credit of $100/$200), and it is also included in your itemized deductions (if you itemize) as well. So that $162/$325 tax savings is actual money you will save, or get refunded. And you donated to a good cause.
These facilities are specifically named:
• Anchor House, Coeur d’Alene
• The Arc, Inc., Boise
• The Children's Home Society of Idaho, Inc., Boise
• Children's Village, Inc., Coeur d’Alene
• Dawn Enterprises, Inc., Blackfoot
• Development Workshop, Inc., Idaho Falls
• Gem Youth Services, Inc., Emmett
• High Reachers, Inc., Mountain Home
• Hope House, Inc., Nampa
• Idaho Drug Free Youth, Inc., Coeur d’Alene
• Idaho Elks Rehabilitation Hospital, Inc., Boise
• Idaho Youth Ranch
• Kinderhaven, Sandpoint
• Learning Lab, Inc., Boise
• Magic Valley Rehabilitation Services, Inc., Twin Falls
• New Day Products, Inc., Pocatello
• Northwest (North Idaho) Children’s Home, Inc.
• Opportunities Unlimited, Inc., Lewiston
• Panhandle Special Needs, Inc., Sandpoint
• Project P.A.T.C.H., Planned Assistance for Troubled Children
• Project Safe Place
• Shepherd's Home, Inc., McCall
• Transitional Employment Services for the Handicapped,
Coeur d’Alene
• Walker Center, Gooding
• Western Idaho Training Co., Inc., Caldwell
• Women's and Children's Alliance
• Winchester Occupational Workshop, Winchester
If you have any questions, about how this will specifically help you, I can quantify it for you pretty easily. Just let me know,
Go Vandals!
-Al
