State NIP Credits Benefit Donors at Tax Time
Donors who make contributions to certain WVU Extension programs from now until June 30, 2010, may be eligible for a tax credit that can help reduce their state tax liability.
WVU Extension Service’s Development Office applied for and received $34,118 in Neighborhood Investment Program (NIP) tax credits for fiscal year 2009-2010. The tax credits can be given to donors who contribute to one of nine programs: the 4-H Health Initiative; Community Development Institute East; the WVU Extension Service’s Fire Training Academy; 4-H State/County Camping Program Scholarships; Energy Express; WV Small Farms; Master Gardeners; the Youth Safe Farm; or the Community Design Team.
“This is an exciting program that allows us to offer an incentive to corporations and individuals for contributing to a variety of programs that have considerable impact on a wide range of West Virginians,” said David E. Miller, WVU Extension Service Associate Provost and Public Service Director.
Businesses and individuals who contribute to any of these nine programs are eligible to receive up to 50 percent of the contributed amount in the form of state tax credits. Donors may use the credits to reduce liability for the Corporate Net Income Tax, the Business Franchise tax, or the Personal Income Tax. “NIP increases charitable giving to local nonprofit organizations,” said Miller. “We are grateful to the West Virginia Legislature, which sets aside $2 million annually in state tax credits for the NIP.”
WVU Extension Service initially has set the minimum donation for receiving the credits at $5,000. A tax credit differs greatly from a tax deduction. A tax deduction reduces the amount of total income on which taxes are based. A tax credit is used to reduce total tax liability. Generally, a tax credit is worth substantially more than a tax deduction.
There are three primary limitations on the use of the tax credits:
- The amount of credit allowable must be taken within a five-year period, beginning with the tax year in which the donation is made.
- A donor may receive no more than $100,000 annually in NIP tax credits.
- A donor cannot use NIP tax credit to reduce total tax liability on any one tax by more than 50 percent annually.
If you would like more information on the NIP program, please visit www.wvdo.org/community/nip.html or contact WVU Extension Service Development Director Julie R. Cryser at julie.cryser@mail.wvu.edu or 304-293-5691.