Delaware Tax Credit for Charitable Contributions
August 7, 2012
By: Kimberly A. Fonda, CPA, CFE The Neighborhood Assistance Act (NAA) provides an opportunity for charitable contributions to give back to the donor. The Act allows businesses or individuals a reduction in their Delaware income tax if they provide qualified services or products to a non-profit neighborhood organization that assists low- and moderate-income families, or that contribute money to non-profit neighborhood organizations that provide the qualified services. The NAA allows for a reduction in Delaware income tax for 50% of the contribution made. A few facts: • Minimum contribution from businesses is $10,000 (a $5,000 tax reduction); • Minimum contribution from individuals is $5,000 (a $2,500 tax reduction); • Maximum contribution is $200,000 (a $100,000 tax reduction); • Benefit can carry forward for 5 years; • Annual program benefit $500,000 awarded on a first come, first served basis o Applications with Part 2A & 2B submitted by for approval after July 1 even though contribution can begin / occur in earlier months. o Include with application the cancelled check(s) and DE form 2001AC. o Only contributions made directly from a qualified taxpayer to an approved non-profit organization will be eligible. This program is run through the Delaware State Housing Authority (DSHA) and its appointed NAA Advisory Committee. The committee reviews and approves applications for both organizations that would like to be qualified under this program and for taxpayers who make eligible contributions. The application is located on-line at www.destatehousing.com/OtherPrograms/othermedia/naa_app.pdf. Non-profit organizations that would like to participate in the program would complete Part 1 and taxpayers making eligible contributions complete Part 2A. The DSHA has a list of already approved non-profit organizations on its website (www.destatehousing.com). If you, as a donor, don't see your chosen organization on the list, talk to them about applying. Taxpayers that are making land contributions to a qualified non-profit need to contact the DSHA prior to beginning the application process. For additional information regarding this credit contact the Faw Casson office in Dover at 302-674-4305.
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