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EndowNebraska Nebraska Charitable Endowment Tax Credit QUESTIONS AND ANSWERS Why
is a tax incentive needed for charitable gifting? What
is the purpose of this tax credit? What
is an endowment? When
is the credit effective? How much is the credit? Nebraska residents, small business corporations, partnerships, limited liability companies, estates and trusts are entitled to a 15% credit of the Federal charitable contribution deduction for qualifying planned gifts, up to an annual maximum credit of $5,000. Nebraska corporations, estates and trusts are allowed a credit for 10% of the qualifying outright gifts up to an annual maximum credit of $5,000. The credit cannot be carried back or forward and it is not a refundable credit. The credit can be used as a dollar for dollar offset of state income taxes in addition to using the Federal itemized deduction, upon which the credit is calculated, to reduce federal income taxes. What
type of charitable gifts qualify? For Nebraska corporations, estates or trusts only qualifying outright gifts to endowments made with gifts of cash or other assets will qualify for the credit. Can
an endowment be established in someone’s honor or in memory of a loved
one?
How the Nebraska Charitable Endowment Tax Credit works: John Smith is 70 years old and is interested in a way to increase his retirement income. Also, he wants to receive a fixed stream of income for his lifetime. In addition, John wants to make a gift to his Hometown that has been so good to him and his family. John decides to give $10,000 to the Nebraska Community Foundation to establish a charitable gift annuity. With this gift he is guaranteed a fixed annual income of 6.5% ($650) for the rest of his life. In the charitable gift annuity agreement John directs that any funds remaining in the gift annuity upon his death are to be deposited into his Hometown’s qualified endowment with the Nebraska Community Foundation. Below are the calculations illustrating the tax credit for which John is eligible: Assumptions: Income
beneficiary
70-year-old
Nebraska Charitable Endowment Tax Credit for Gift: Nebraska
tax credit rate
15% Out of Pocket Cost of Gift: Gifted Amount $10,000.00 Less: Federal tax savings (25% rate) 1,079.00 Nebraska tax savings (7% rate) 302.00
Nebraska tax credit (15% credit)
647.00 Net Out-of-Pocket Cost of Gift $ 7,972.00
These calculations are for illustration purposes only and should not be considered legal, accounting or other professional advice. To receive a free, no obligation explanation of what the Nebraska Charitable Endowment Tax Credit may mean to you please contact Jim Gustafson, Gift Planning Director at 402.323.7341 or at jgustafson@nebcommfound.org If you would like a printable version of this page click HERE
See the Official EndowNebraska Website HERE |
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Nebraska Community Foundation 650 J Street, Ste. 305 PO Box 83107 Lincoln, NE 68501 Phone: (402) 323-7330 Fax: (402) 323-7349 E-mail: webmaster@nebcommfound.org |
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