The Community Foundations of Southwest Iowa wants to make you aware of the newly approved IRS regulations which could impact the federal deductibility of Endow Iowa charitable gifts. These regulations do not impact the federal tax returns of donors who utilize the standard deduction or have made an Endow Iowa qualified gift as an IRA Charitable Rollover but will affect those who itemize.

The regulation requires that federal charitable deductions are reduced by the value of any state tax credit received. For example, a taxpayer that makes a $1,000 charitable donation to an Endow Iowa fund would receive a $250 (25%) state tax credit. With the new regulation, when filing federal taxes, the taxpayer cannot deduct the entire $1,000 charitable donation as in the past, but only the difference between the donation and the state tax credit, or $750 in this example. Put another way, what was previously a $1,000 charitable tax deduction is now a $750 charitable tax deduction. There is an opportunity to deduct the full value of the gift if the taxpayer has not reached the $10,000 state and local taxes (SALT) cap. Click here for a link to the full regulation from Treasury.

The effect of this change is different for all taxpayers. Due to the complex nature of this regulation, we recommend you consult your tax advisor to better understand its impact on your specific situation. The Community Foundations of Southwest Iowa welcomes the chance to be of service, so please contact us with any questions or concerns.