tax-credits-for-donations

Tax Credits for Donations

F.R.E.E. TagsOverview of the Tax Credit program

F.R.E.E. has been approved by the Virginia Department of Social Services as an authorized non-profit under the Neighborhood Assistance Program [NAP] for the period July 1, 2012 - June 30, 2013.. Through NAP, F.R.E.E. receives an allocation of Virginia State income tax credits. These tax credits can be claimed by individuals and businesses that donate to F.R.E.E. The NAP program is designed to encourage donations to organizations like F.R.E.E. that help impoverished people in Virginia.

  • Individuals who donate $500 or more to F.R.E.E. during the designated period can receive a 65% tax credit on their Virginia state taxes.
  • This is a direct dollar-for-dollar credit against taxes owed to the state, not a deduction.
  • As an example, individual who donate $500 can claim a $325 state tax credit, which will lower their tax bill by $325.
  • This means that their $500 donation to F.R.E.E. actually only costs them $175.
  • A $1,000 donation will result in a $650 tax credit.
  • Individuals can claim these tax credits for donations of cash or marketable securities to F.R.E.E.
  • The limit on individual donations is $76,923, which corresponds to a $50,000 annual tax credit.
Businesses can also receive a 65% Virginia state tax credit for donation of:
  • cash
  • goods
  • marketable securities
  • real estate
  • healthcare, professional and contracting services; and
  • rent or lease of any facility that will be used by F.R.E.E.
The minimum business donation is $616. Businesses may to donate up to $269,231 each year and receive the 65% credit (up to $175,000).
  • Inventory items being donated must be valued at the lesser of their fair market value (FMV), minus any gain that would have been realized if the item had been sold at its FMV on the date of the donation or its cost basis. Items must be owned by the donor business.
  • If the donated item has been fully expensed or depreciated by the business, the cost basis is zero and not eligible for a NAP tax credit. If the item has been partially expensed, the value would be the remaining cost basis.

How to Claim Your NAP Virginia state tax credit

  1. Make an eligible donation to F.R.E.E. For business donations other than cash and marketable securities, please first consult with Sonja Schaible, Executive Director of F.R.E.E.
  2. Download and complete the appropriate donation forms. Up to date forms can be found at the Department of Social Services website, http://www.dss.state.va.us/community/nap.cgi. Note that multiple forms may be required for particular donations. Make sure you have completed all of necessary forms.
  3. Submit the completed form to F.R.E.E. You can do this at the time you make your donation or after the donation is made. Don't forget to complete and submit the form so that you can claim your tax credit. Mail it to F.R.E.E., P.O. Box 8873, Roanoke, VA 24014.
  4. F.R.E.E. will complete Part III of your submitted form, certifying your donation, and submit the forms to the Virginia Department of Social Services for review and approval.
  5. The Virginia Department of Social Services will mail you a Tax Credit Certificate, usually within 30-45 days.

Thank you for giving consideration to donating through the NAP program. Your contributions to F.R.E.E. will help those in need in your community achieve Independence through Mobility.