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Question: What is Endow Kentucky?
Answer: The Endow Kentucky tax credit was authorized by the General Assembly in 2010. It offers taxpayers, either individuals or businesses, an opportunity to help their community and receive a tax credit toward their Kentucky Income Tax. A taxpayer may receive a 20 percent income tax credit not to exceed $10,000 per donor per taxable year for a gift to endowed permanent funds at certified community foundations. This tax credit is in addition to any other deductions, federal or state, for the gift.
For example, a donor makes a gift of $50,000 to an endowed fund (only the fund’s earnings are granted out annually) and may receive a $10,000 Kentucky income tax credit. We say “may receive” because the tax credits are limited to $500,000 for the entire state for each fiscal year beginning July 1. Last year’s tax credits were completely used-up by mid-December of 2012; only five and half months into the fiscal year.
What was the catalyst for the legislation?
The purpose of the legislation is to spur the development and growth of philanthropy, particularly in rural parts of the Commonwealth.
What is the process for receiving the Tax Credit?
To apply, a Kentucky taxpayer, either individual or business, must file an application for preliminary authorization of the tax credit with the Department of Revenue. To claim the tax credit, the taxpayer will be advised as to the correct attachment to their tax return. The credit may be taken against individual income tax, corporate income tax and the limited liability entity tax, in addition to the federal charitable tax deduction value of the gift. This tax may be carried forward for up to five years.
Check with your CPA, attorney and/or financial advisor for more information about the Endow Kentucky income tax credit.
Davette Swiney is vice president of the Central Kentucky Community Foundation.