Zero Cost Donation Option for Individuals and Couples
in the 15%, 25%, or 28% Federal Tax Brackets
This includes individuals, trusts, partnerships, LLPs, sub-chapter S corporations,
or other such entities who pay their federal income tax as individuals
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HOW DOES THE ZERO-COST
DONATION WORK FOR YOU?
A unique option using federal deductions and 65% Virginia NAP Income Tax Credits
This unique no-cost opportunity is made possible
by combining three factors - your standard federal deduction, a 65% Virginia income tax credit*,
and
the generosity of a long-time supporter of the Soho Center who will
give you a personal gift by check to bring the net, after-tax
cost of your donation to zero.
In effect, you will redirect state and federal taxes you would have
paid anyway and get a gift check that makes up the difference.
Here's an example of how it works -
Let's
assume you are in the 25% bracket federally, you pay $6,000/year in Virginia income tax, and you decide to make a
$9,000
donation to the Soho Center.
Here's what happens -
You donate:
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$9,000 |
You get a VA tax credit*
(65% of $9,000 = $5,800)
You use this credit dollar-for-dollar to pay
your VA income tax. In this example, your
$6,000 Virginia income tax is lowered by
$5,800 to only $200.
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($ 5,800) |
Your federal tax is lowered by:
(25% of $9,000 = $2,750)
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($ 2,750) |
You get a personal gift check
to zero out your donation cost:
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($ 450)
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| Net Cost of your $9,000 Donation: |
$ - 0 - |
In this
example, one of several Soho Center supporters
will make
you a personal
gift (by check) to
bring your after-tax
net cost to zero. In this case, the gift would
be $450. This $450 is a true gift under
IRS rules - there is no
coercion and the gift is not
taken as a deduction by
our supporter. Further, our supporter will neither seek nor
receive any benefit from you (services,
payment,
etc.) for having made the
gift. And since the gift is less than $13,000, neither you
nor our supporters have any IRS reporting obligation. (And,
regardless of its amount, such a gift has no tax effect on you,
the recipient.)
WHAT'S THE "RIGHT" DONATION AMOUNT?
Donors often ask what is the "right donation amount" to make - 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
you.
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
nothing.
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If you have any questions or are ready to make a donation and
take advantage of this unique zero-cost option, please call Soho's
Director, Jeanna Beker, at 540-923-5012
to get
the simple half-page form needed for your Tax Credit* from the state.
NOTE: If you make your donation with appreciated assets (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.
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*Tax
Credit
information - The
Soho Center is a 18 year participant in Virginia's Neighborhood
Assistance Program. This innovative state program rewards donors to
the
Soho Center with
an income tax credit worth 65% of their donated amount. This tax
credit
can then be used, dollar-for-dollar, to pay the donor's Virginia
income
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.
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