Ho! Ho! Ho! Tis the season for giving and thinking to finalize tax considerations when reflecting on the past calendar year. You may receive a return of a 50 percent direct credit to your tax bill when donating up to $200 per individual and $400 for couples filing jointly, given to an Indiana-funded university. Because Purdue Extension is part of a state-funded university, one can donate to the local Extension Office and that would qualify. Therefore, a $100 contribution to the Purdue Extension-Elkhart County program would cost one only $50.
While it might seem I have had too much eggnog, this giving option is for real. The discussion for this column focuses on Elkhart County; these options would most likely be available for any Indiana county if one is reading this with interests from outside of Elkhart County.
One can also specify in many cases how the money would be used (i.e. 4-H youth development, agriculture, natural resources, or health and human science educational programming areas or specific equipment, etc. for teaching). One could even specify the gift be used for a specific educational program or topic (i.e. 4-H STEAM, advanced Master Gardener workshop, nutrition education, workforce development workshop, etc.). Some limitations do exist. For example, funds donated for awards or scholarships would not be eligible for the additional direct state tax deduction.
Give the Extension office a call and ask about this excellent way you can support community programs for minimal cost to your pocket due to the additional state tax credit. Other options focus on income tax deductions rather than a direct credit. Purdue Extension Educator, Jim Luzar, stated, “Writing a check may not always be the best bang for the buck. Only about 11 percent of taxpayers itemize deductions according to tax data. Most farms will not be itemizing and will take the standard deduction.”
The threshold for a standard deduction is $24,000 and a $5,000 check would fall within the standard deduction. However, a gift of $5,000 worth of grain or an animal donation would not fall under the standard deduction umbrella. Donating the $5,000 in the form of a commodity would give the farm a $2,000 federal tax deduction thereby allowing the farm to gift a total of $5,000 for only a cost of $3,000 to the farm. Before donating a commodity, please consult with your tax practitioner and talk with the intended recipient to determine the specific tax benefits of your situation and assure a seamless plan.
Another example is that local Extension positions may be endowed with a family name or business for example. There are also family scholarships that may be set up to specifically benefit a county or even multiple counties. Land or other assets may also be willed or donated to sponsor larger gifts as well. This can be done through the Purdue Foundation and also can be done over time and there is no percentage fee taken out of the gift like there are at many foundations.
Another possibility for setting up an endowed instrument or contributing to an existing endowment is to utilize “required minimum distributions” (RMD) from IRA’s or other retirement funds that ultimately would otherwise be taxed. These RMD and the associated capital gains can be donated, and the tax liability is removed for both the donor and the recipient who receives the full benefit.
To discuss a giving option, contact your local Extension office. In Elkhart County, visit our website at
www.extension.purdue.edu/elkhart or you can contact the local office by calling 574-533-0554 for more information regarding this week’s column topic.