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The State of North Dakota encourages charitable giving by offering individuals and businesses a 40-percent tax credit for qualifying gifts. Cash gifts from individuals must be $5000 or greater and must be placed in a qualifying endowments. The tax credit is equal to 40 percent of the charitable deduction up to a maximum tax credit of $10,000 per year per taxpayer or $20,000 per year per couple filing jointly. The credit may be carried forward for three years.
This unique tax credit also applies to planned or deferred gifts (e.g. charitable trusts, gift annuities, life insurance policies, etc.) to a qualified ND charitable nonprofit or a qualified ND endowment. The 40-percent tax credit was introduced in 2007 as an opportunity for businesses only. It was extended to individuals during North Dakota?s 2011 legislative session. Law makers believe the tax credit helps to build communities and enrich the lives of North Dakotans by supporting the work of the state?s 3,300 charitable nonprofit organizations. The tax credit:
To qualify, cash gifts must be placed into permanent endowments that benefit North Dakota charitable nonprofit organizations.
Individuals may receive a state tax credit for contributions of $5000 or more (lump sum or aggregate in one year) to qualified ND endowments. The tax credit is 40 percent of the charitable deduction allowed by the IRS up to a maximum credit of $10,000 per year per taxpayer or $20,000 per year per couple filing jointly. Effective for taxable years starting in 2011.
Businesses (C corporations, S corporations, estates, limited liability companies, trusts and financial institutions) that pay state income taxes may receive a 40-percent credit up to a maximum credit of $10,000 for contributions to qualified ND endowments. Effective for taxable years starting in 2007. Financial institutions were included in 2011.
Individuals may receive a state tax credit for a planned gifts (e.g., charitable remainder trusts, charitable gift annuities, life insurance policies, etc.) to qualified ND charitable nonprofits or qualified ND endowments. The tax credit is 40-percent of the charitable deduction allowed by the IRS up to a maximum credit of $10,000 per year per taxpayer or $20,000 per year per couple filing jointly. Effective for taxable years starting in 2007.
Qualified nonprofit organization – a ND incorporated or established 501(c)(3) organization to which contributions qualify for federal charitable income tax deductions with an established business presence or location in North Dakota.
Qualified endowment – a permanent, irrevocable fund (comprising cash, securities, mutual funds or other investment assets established for a specific charitable, religious or educational purpose and invested for the production or growth of income, or both, which may either be added to principal or expended) held by a qualified nonprofit organization, a community foundation or a bank or trust company holding the fund on behalf of a qualified nonprofit organization. See ND Century Code 57-38-01.21 and 57-35.3 for details.
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