Have you heard of the Endow Kentucky Tax Credit?
The Endow Kentucky Tax Credit program provides incentives for communities to grow philanthropy, promoting community and economic development. Endow Kentucky enables any Kentucky taxpayer (business or individual) to receive a state tax credit of up to 20% of their charitable gift to a permanent endowment fund at their local community foundation (up to $10,000 per taxpayer). Donors can make a long-term investment in their communities by contributing to or establishing a permanently endowed fund, and receive a tax credit in the process.
Each fiscal year has $500,000 in tax credits available.
In addition to the allowable tax deduction for charitable gifts, donors will receive a credit that is taken off their tax bill dollar for dollar. So, if a donor has a Kentucky tax bill of $1,000, a donation of $5,000 through Endow Kentucky would eliminate that tax altogether (20% of $5,000 is $1,000). To receive the maximum credit allowed by the program, you could give a $50,000 gift.
What Gifts Qualify for the Endow KY Tax Credit?
Gifts can be cash or appreciated stock, and must be made to a qualified community foundation or affiliate foundation in Kentucky, such as the Community Foundation of Hazard and Perry County. Donors may give any amount to an existing endowment at the Community Foundation, as long as grants support Kentucky nonprofit organizations. You may add to an existing endowed fund, including the Hazard and Perry County unrestricted charitable fund, or establish a new one, including one that supports a rural county that is not currently served by a community foundation.
What Does a Donor Do?
If you are considering a gift for the Endow Kentucky Tax Credit, contact the Community Foundation of Hazard and Perry County, 606-439-1357.
- You will file an application with the Department of Revenue for preliminary approval of the charitable gift that you intend to make to an endowment fund.
- The Department of Revenue will review the application and issue a preliminary approval letter.
- You will have 30 days to make your contribution to the Community Foundation.
- Within 10 days of making your gift to the Community Foundation, send verification of your gift to the Department of Revenue.
- The Department of Revenue will issue a letter of credit for you to file with your tax return.
For more information, contact Gerry Roll, Executive Director, gerry@commfoundation.org
Resources
Endow Kentucky Tax Credit Facts
- The credit may be taken against individual income tax, corporation income tax and limited liability entity tax.
- The credit may be up to 20 percent (20%) of the value of the endowment gift provided by the taxpayer, not to exceed $10,000. The credit will be less than 20% only if the total credits requested exceed the total credit cap.
- The total amount of the credits that may be awarded is limited to $500,000 in each fiscal year.
- Any approved Endow Kentucky Tax Credit that cannot be utilized by the taxpayer during a particular taxable year may be carried forward for use in a subsequent taxable year, for a period not to exceed 5 years.
- Any taxpayer providing a charitable gift to a permanent endowment fund of a qualified community foundation, its affiliate foundation or county specific component fund, may file an application form for preliminary credit authorization with the Kentucky Department of Revenue.
- The required application form is posted on the Kentucky Department of Revenue website http://revenue.ky.gov/endowedkytaxcredit.htm (You will need the Community Foundation’s federal tax ID #61-1329396)
- Applications may be submitted by email at KRC.WEBResponseEconomicDevelopmentCredits@ky.gov , by fax at 502-564-0058, or hand delivered to the KY Dept. of Revenue, first floor security desk, 501 High Street, Frankfort, KY 40601.
- The Department of Revenue will issue a notice of preliminary approval for the tax credit to the taxpayer.
- The taxpayer will have 30 days after the date of the notice of preliminary approval to provide an endowment gift to a qualified community foundation, its affiliate foundation or county specific component fund.
- Within 10 days of making the gift, the taxpayer must report to the Department of Revenue proof of the endowment gift. The Schedule ENDOW has been developed for the recipient foundation to document the gift.
- The Department will review the Schedule ENDOW completed by the recipient foundation and issue a final tax credit approval letter to the taxpayer.
- The taxpayer should keep a copy of the final tax credit approval letter for their records
