What is the Montana Tax Credit for Charitable Endowment gifts?
Through this unique tax credit incentive, a Montana taxpayer receives a reduction on the taxes s/he owes - up to $10,000 per year - by making a qualified charitable contribution to a qualified endowment.
Who can take advantage of Montana's Endowment Tax Credit?
Any person or business that pays income taxes to the State of Montana.
How can I take advantage of this Tax Credit?
An individual taxpayer can claim the tax credit by making a gift of cash or property (in the form of a planned gift) to a qualified endowment to benefit a tax-exempt charitable 501(c)(3) nonprofit organization. The Bozeman Health Foundation meets this requirement.
A business likewise does so by making a cash gift to a qualified endowment to benefit a tax-exempt charitable 501(c)(3) nonprofit organization.
What is a qualified endowment?
An endowment is a financial asset created by a donation made to a non-profit group or institution in the form of investment funds or other property that has a stated purpose at the bequest of the donor. Most endowments are designed to keep the principal amount intact while using the investment income from dividends for charitable efforts.
To be "qualified" for the tax credit, the endowment must be a permanent, irrevocable fund held by a Montana organization that is an IRS-designated 501(c)(3) tax-exempt charitable organization. The endowment may be held and managed by the tax-exempt charitable 501(c)(3) nonprofit organization or by a bank or trust company on behalf of a tax-exempt charitable 501(c)(3) nonprofit organization. The Bozeman Health Foundation maintains several endowments for the benefit of Bozeman Health Services.
How can my business take advantage of the Montana Endowment Tax Credit?
By making a contribution to the qualified endowment of a charitable 501(c)(3) nonprofit organization, like Bozeman Health Foundation.
How much do I have to be able to contribute in order to qualify for the Tax Credit?
The law governing tax credits to qualified endowments doesn't specify a minimum amount to qualify.
I already give an outright gift to a charitable 501(c)(3) nonprofit organization. What are the advantages of giving to a qualified endowment instead?
A gift to an endowment will help ensure the charitable 501(c)(3) nonprofit organization ́s sustainability and provide a source of permanent income. A one-time gift to an endowment could provide an annual return equivalent to the gift you make every year, effectively endowing your annual gift to your favorite charity.
What is the maximum tax credit I can claim through the Montana Endowment Tax Credit?
A taxpayer is allowed a tax credit in an amount equal to 40% of the present value of the aggregate amount of the charitable gift portion of a planned gift made by the taxpayer during the year to any qualified endowment. The maximum credit that may be claimed by a taxpayer for contributions made from all sources in a year is $10,000 per individual or $20,000 per couple. The credit may not exceed the taxpayer's income tax liability.
What is a planned gift?
A "planned gift" is an irrevocable contribution to a permanent endowment held by a tax- exempt charitable 501(c)(3) nonprofit organization, or for a tax-exempt organization, when the contribution uses any of the following techniques that are authorized under the Internal Revenue Code:
a. charitable remainder unitrusts;
b. charitable remainder annuity trusts;
c. pooled income fund trusts;
d. charitable lead unitrusts;
e. charitable lead annuity trusts;
f. charitable gift annuities;
g. deferred charitable gift annuities;
h. charitable life estate agreements;
i. paid-up life insurance policies;
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