Idaho Provides a Way to Help Adventist Schools

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Yes, you read it right!  The State of Idaho for many years now has had an income tax credit for donations to public and nonprofit private K-12 schools and universities.  (This includes the SDA church schools.)  Due to budget issues the public schools are facing, the Idaho Legislature extended and expanded this credit through 2016.  Beginning in 2011 the maximum 50% credit limitation increased from $100 to $500 per taxpayer ($1,000 for a married couple filing jointly) or 50% of your Idaho tax liability, whichever is less.


Here’s how it works – Suppose you are a single taxpayer who donates $1,000 to one of the church schools (a local K-8 or Gem State Academy (GSA)).  Since this is a charitable donation, you will receive a tax deduction assuming you itemize on your income tax returns.  If you are in a 28% Federal tax bracket and a 7.8% Idaho tax bracket, the net out of pocket cost to you after the 50% credit is $142.  In this example, the school gets $1,000 and it only costs you $142.  A win, win for both the school and you.  This is computed as follows:


$ 1,000   Donation to SDA school

  (  280)  Federal tax savings due to contribution  ($1,000 x 28%)

  (    78)  Idaho tax savings due to contribution  ($1,000 x 7.8%)

  (  500)  50% Idaho tax credit for donation  ($1,000 x 50%)

$    142   Net cost to you. 


Suppose you are a single person in a 10% Federal and 6.1% Idaho tax bracket.  Then your net cost would be $339.  The school is still receiving $1,000, so it’s still a substantial benefit to the school and to you on your Idaho tax return.


This generous Idaho income tax credit offers an opportunity for our membership to make a donation to one of these schools for a very minimal cost.  Each donor (you) will receive income tax deductions for the charitable contribution plus the 50% Idaho credit for contributions to an Idaho Educational Entity.  This substantially reduces your actual out of pocket cost.  The schools receiving the donations receive the full benefit of the amount donated. 


To qualify for the income tax deduction and the Idaho state credit, your donations cannot name a specific child to receive the benefit of your gift.  You may mark your donations for the general operating budget, the worthy student fund or any other fund the school has needs for.  The income tax deduction and credit are not available for tuition payments or assistance to a particular student.


Please note:  The tax credit discussed above applies only to Idaho state income tax liability and can only be claimed if you donate directly to an Adventist School.  Donations made to local churches will not qualify for the 50% tax credit.  There is no corresponding credit against the Federal income tax liability.  This credit is limited to $500 per taxpayer ($1,000 on a joint return) or 50% of the taxpayer’s total Idaho income tax liability.  (A similar credit exists for corporate taxpayers limited to 10% of their tax liability of $5,000, whichever is less.)  Please consult your tax advisor or financial consultant to determine the exact effects of this Idaho state tax credit to your specific situation.  There may be some taxpayers who will NOT receive the full benefit of the credit as outlined above.  This article is not offering tax advice nor does it address all possible tax situations or results. 


Alethea D. Torbert, CPA 


2011 Education Tax Credit Q&A Info