Tax Credit Can Reduce Tax Liability

By admin

There are eight days remaining in 2015 – which means you still have time to make a gift to support our scholars AND to reduce your tax liability for this year.

As charitable donations, gifts to Scholars Unlimited can reduce your federal tax liability if your itemize your federal tax return. In addition, gifts to Scholars Unlimited qualify for the Colorado Child Care Contribution Credit (CCCCC), a state tax credit available to both individual and corporate Colorado taxpayers that reduces their Colorado state income tax liability by providing a 50 percent tax credit for cash contributions to qualifying child care providers — including Scholars Unlimited.

The effect of this credit? Half of your donation to Scholars Unlimited is offset by a reduction of your Colorado income taxes – and you are still be able to claim your full contribution as a charitable deduction on your federal and state income tax returns if you itemize deductions. A sample (based upon a 28 percent taxation rate) of the total effect on your taxes is shown below.

As always, consult with your tax advisor to determine how the credit will affect you personally.

Federal Income Tax Bracket 28%
Contribution to Scholars Unlimited $ 1,000.00
Colorado Child Care Contribution Credit (500.00)
Charitable Gift Deduction — Colorado state taxes (46.30)
Charitable Gift Deduction – federal taxes (280.00)
Related federal tax effect* 152.96
Net “cost” of gift to Scholars Unlimited 326.66
Total tax savings of gift to Scholars Unlimited 673.34

* For federal tax purposes, lower state income taxes mean lower state tax deductions.