There is no doubt that the United States Tax Code is complicated.
It may even be tougher to understand and navigate than my high school trigonometry class — although I doubt it.
That being said, you can make an immense difference with a donation to a 501c3 or you can simply pay taxes that you owe.
The Internal Revenue Service website says the following: In most cases, the amount of charitable cash contributions taxpayers can deduct on Schedule A as an itemized deduction is limited to a percentage — usually 60 percent — of the taxpayer’s adjusted gross income. Qualified contributions are not subject to this limitation. Individuals may deduct qualified contributions of up to 100 percent of their adjusted gross income.
A corporation may deduct qualified contributions of up to 25 percent of its taxable income. Contributions that exceed that amount can carry over to the next tax year.
To qualify, the contribution must be: A cash contribution, made to a qualifying organization, made during the calendar year.
So you must check with your accountant but in simple terms donations made to the Halifax Community College Foundation are tax deductible and can be carried over tax years.
As an example, Joe Donor pays $50,000 a year in federal taxes.
Joe is frustrated paying so much.
Joe decides he wants to make a difference for the future for Halifax Community College students and establishes a scholarship under Joe’s mothers name with the Halifax Community College Foundation, a qualified 501c3.
Joe establishes a scholarship by donating $30,000 to endow the Mom scholarship.
These endowed funds will earn interest to allow the HCC Foundation to award the Mom scholarship.
If Joe can only claim a $15,000 tax deduction this year as it is a percentage of his income, Joe should be able to claim $15,000 the next year.
Joe would owe $30,000 less in taxes.
Of course, tax rules are complicated and this is a simplified example.
You must contact your accountant for accurate information and if this applies to you.
The endowed funds from Joe Donor last in perpetuity and earn interest for the Joe’s Mom scholarship in the HCC Foundation.
Joe Donor decides what qualifications and requirements the student has to meet to receive the Mom scholarship.
Joe does not get to choose the recipient of the scholarship but can meet the student and celebrate at the annual donor luncheon held at HCC.
Joe can add funds to this scholarship at any time and grow this fund to offer a larger or multiple scholarships.
The more funds are in an account, the more interest will be gained and a larger scholarship can be awarded.
A charitable contribution is a great way to receive a tax benefit, make a huge difference in the life of a student, and change our community for the better.
HCC strives to meet the diverse needs of our community by providing high quality, accessible, and affordable education, training and services for a rapidly changing and globally competitive marketplace.
HCC will continue to be a catalyst for educational, cultural and economic progress in the Roanoke Valley by anticipating and responding to the needs of an evolving global community.
Allen Purser is executive director of the Halifax Community College Foundation