Zero Cost Donation Option for Virginia Corporations
or High-Income Individuals and Couples
HOW DOES THE ZERO-COST
This unique option uses federal deductions and 65% Virginia NAP Income Tax Credits
to give you tax savings equal to the full value of your donation
(And if you
make your donation with appreciated assets, not only will
your donation cost nothing, you will actually get back more in taxes saved
your total donation amount. More on this below)
Here's how the basic Zero-Cost Donation works -
Assume that you make a $10,000 donation by check to the Soho Center.
This $10,000 donation will give you the standard $10,000
federal deduction worth
approximately $3,500 of federal tax savings.
In addition, you will receive a 65% Virginia Income Tax
Credit - in this case a credit of $6,500.
You can use this tax credit, dollar-for-dollar, to pay your Virginia income tax obligations (or receive a
refund of previously-paid taxes from the current year).
In other words, your
donation of $10,000 gives the Soho Center $10,000 of support - while
lowering your combined federal and state taxes by $10,000 - which makes
cost of your donation zero.
You can, of course, scale the donation amount up or down as you wish, but the zero cost remains.
About Appreciated Assets:
If you make your donation with appreciated assets, you will get the
full zero-cost effect discussed above. In addition, you will
eliminate fully the capital gains tax you would have paid had you sold
the appreciated asset. The result is that you will save in taxes more than the cost of the donation; you will actually come out ahead dollar-wise.
For more on the significant extra advantages of donating appreciated assets, please Click Here
for an article by David Marotta, well-respected financial advisor and contributor to Washington
Post, Forbes, LA Times, Money Magazine, Dow Jones MarketWatch,
Financial Planning Magazine, and Investment Advisor.
WHAT'S THE "RIGHT" DONATION AMOUNT?
Donors often ask what is the "right donation amount" - especially when the donation doesn't cost anything.
Our general advice (if you want to do the most good) is to take your
total annual Virginia income tax obligation and multiply it by 1.5 to
get the "right" amount.
Here's why -
If, for example, your total annual Virginia income tax obligation is
$5,000, then donate $7,500 ($5,000 x 1.5). If you do this, the
65% tax credit you receive will be approximately $5,000 which will
essentially redirect your entire year's worth of Virginia income tax,
giving the maximum donation to the Soho Center - at no cost to
In other words, multiplying your total annual Virginia income tax
obligation by 1.5 and donating that amount will create a tax credit
that will complete eliminate your Virginia income tax, and it will lower
your federal tax by an amount that will make your total donation cost
If you have any questions or are ready to make a donation and
take advantage of this unique zero-cost option, please first call Soho's
Director, Jeanna Beker, at 540-923-5012
to confirm the availability of tax credits and to get
the simple half-page form needed for your Tax Credit* from the state.
NOTE: If you make your donation with appreciated assests (stock or other securities), your tax savings will be even bigger
since you won't have to liquidate them (and pay capital gains) before using the net proceeds to make your donation.
|NOTE: If you are in the 15%, 25%, or 28% federal tax bracket, you can still make a \zero-cost
donation using a modified approach. For more information on this option, please Click Here.
information - The
Soho Center is a 17 year participant in Virginia's Neighborhood
Assistance Program (NAP). This innovative state program rewards donors
Soho Center with
an income tax credit worth 65% of their donated amount. This tax
can then be used, dollar-for-dollar, to pay the donor's Virginia
tax obligations. Any excess credit can be rolled forward and used
by the donor for up
to 5 years. For more information on this tax credit
program, please call the Soho Center at 540-923-5012.