A tax credit is a dollar-for-dollar reduction of the actual tax someone owes.
They are NOT a deduction! They are usually more valuable than a deduction because they directly cut down on a donor’s tax bill!
Tax credits can be combined with a deduction in some circumstances (State Credit + Federal Deduction)
CSP tax credits are refundable! If the tax credit is greater than the donor’s tax credit liability, the donor receives a refund.
HOW DO TAXT CREDITS WORK? RURAL VS URBAN:
The percentage of credits awarded to the donor is dependent on the location of the charity (not the location of the donor).
RURAL COMMUNITIES Less than 15,000 population 70% Tax Credit
URBAN COMMUNITIES More than 15,000 population 50% Tax Credit All Johnson County applicants, regardless of community size, are eligible for a 50% credit.
HOW DO TAX CREDITS WORK? QUALIFIED NON-PROFIT:
Obtain Tax Credit Program Approval The nonprofit must apply for and be approved by Kansas Commerce to participate in the tax credit program.
Receive Donations for Donors A donor contributes money, property, or other eligible assets to the nonprofit. The donation must meet specific program criteria to quality for tax credits (e.g., a minimum donation amount of $250, donation types, etc.).
Issue Tax Credit Documentation Once the donation is received, the nonprofit provides the donor with a tax credit certificate or receipt.
Compliance and Reporting The nonprofit tracks all eligible donations, submits reports to Kansas Commerce and ensures they do not exceed their allocated amount.
Donor Uses the Credit The donor includes the tax credit certificate with filling their taxes.
HOW DO TAX CREDITS WORK? DONORS:
The CSP program is a donation-based tax credit:
Donors MAKE A Qualified Donation A donor makes a $1,000 donation to a state-approved nonprofit or program that qualifies for a 50% tax credit. A minimum donation of $250 is required.
Calculate the Tax Credit Since the tax credit is 50%, they would receive a $500 tax credit ($1,000 x 50%).
Apply the Credit to Your Tax Bill Before the credit, assume their total tax liability (the amount owed before credits) is $3,000. After applying the $500 credit, their new tax liability is $2,500.
Report the Credit The claim the tax credit when they file their tax return by filing out the appropriate form and providing documentation of the donation or eligible expense.
TAX CREDIT FORMULAS
Tax Credit Allocation at 70% (rural) $150,000 Will generate $214,285 in donations ($150,000 / 70% )
Tax Credit Allocation at 50% (urban) ($150,000) Will generate $300,000 in donations ($150,000 / 50%)
APPLICATION LETTERS: PLEDGES VS SUPPORT
Support Letters
Purpose: A support letter is a personalized statement of endorsement, explaining why the project is valuable and deserving of funding.
Structure: It must be unique and heartfelt, ideally including specific details about the impact of the project.
Impact on Application: A generic form letter will hurt an applicant’s score, whereas a thoughtful, detailed letter and strengthen the case.
Applications will score higher based on the diversity of where the letters originate from. Kansas Commerce is looking for letters from:
Your tax deductible charitable gifts made payable to the Lincoln County Hospital Trustees can be donated for any of the charitable causes:
Emergency Department Equipment Fund
Laboratory Equipment Fund
Imaging Equipment Fund
Rehab Equipment Fund
Health Care Worker Scholarship Fund
Endowment Fund
Lincoln County Hospital accepts the following tax deductable gifts:
Cash gifts, grain, cattle sales, appreciated stocks, bonds, real estate, IRAs or other assets which would otherwise be subject to taxes on the appreciation if sold.
You can make a gift “In Memory Of” a friend or loved one.
Life insurance policies and estate trusts can be used to donate as well. To use life insurance policies you no longer need, or to gift part of your estate to the hospital, make the Lincoln County Hospital Trustees the beneficiary of the policy or estate trust.
Endowed Giving: An endowment is an investment in the future. Your gift is evergreen. The principal amount of your gift may not be spent, only the interest/investment returns are spent each year.
