FAQs

The Endow Iowa Tax Credit Program has several requirements; below are answers to some of the most frequently asked questions about the Endow Iowa Tax Credit Program.   

   

How does the Endow Iowa Tax Credit Program work?

Work with your Community Foundation to complete the paperwork on this.  The process is very simple and is just one page.  After making a gift to a Qualifying Community Foundation, they will assist you in getting the correct information submitted.  You will be asked to provide your social security number along with contact information, etc.  The Community Foundation will also sign off of the application and submit it on your behalf to the Iowa Economic Development Authority (IEDA).  The IEDA will then notify the donor of the tax credit award, and send a copy of that award letter to the Community Foundation.   


The actual tax credit benefit is realized when the donor files taxes.  The letter from the Iowa Economic Development Authority can be used by the taxpayer as back-up documentation for their eligibility for the credit.

  

 

How much is available through this Tax Credit Program?

The most recent legislation relating to Endow Iowa Tax Credits provides $6 million in tax credits.  

How does one apply for tax credits?

Work with your Community Foundation to complete the paperwork on this.  The process is very simple and is just one page.  After making a gift to a Qualifying Community Foundation, they will assist you in getting the correct information submitted.  You will be asked to provide your social security number along with contact information, etc.  The Community Foundation will also sign off of the application and submit it on your behalf to the Iowa Economic Development Authority (IEDA).  The IEDA will then notify the donor of the tax credit award, and send a copy of that award letter to the Community Foundation.   


The actual tax credit benefit is realized when the donor files taxes.  The letter from the Iowa Economic Development Authority can be used by the taxpayer as back-up documentation for their eligibility for the credit.



Are there Options to Utilize Endow Iowa tax Credits for Certain Gifts from Estates?

There may be some cases in which Endow Iowa Tax Credits could be awarded for qualified gifts from estates and used on Iowa tax returns (i.e. on a fiduciary income tax return or beneficiary's income tax return); there are other situations where Endow Iowa Tax Credits are not permissible for use (i.e. on an inheritance tax return).  Please consult your tax/legal advisor for specific information related to your particular circumstance. 

 

 

Can Non-itemizers utilize Endow Iowa tax Credits on their state tax returns?

Taxpayers who do not itemize their deductions can still claim an Endow Iowa Tax Credit equal to 25% of their contribution (so long as they are awarded an Endow Iowa Tax Credit for an eligible gift).  While they will not receive any benefit in regard to their federal income tax return is the standard deduction is claimed on the federal return, they will still receive a 25% benefit on their Iowa return.  For example, an individual who donates $1,000 will still receive a $250 reduction on their Iowa income tax return related to this donation (awarded on a first-come, first-served basis).

 

 

Can both spouses claim the maximum endow iowa tax credit per year?

The Iowa Department of Revenue has considered a married couple to be two individuals, or two taxpayers; therefore, no matter if they file a joint Iowa return or a married filing seperately on a combined return, each spouse could claim the maximum Endow Iowa tax credit, per year. 

 

 

Why is a social security number required on the endow iowa tax credit application?

All of the compliance work done by the Department of Revenue regarding taxpayers claiming tax credits rely upon social security numbers.  The current process hinges on the social security  or federal identification numbre being provided; therefore, social security numbers will continue to be required for Endow Iowa Tax Credit applications. 

 

 

Who Can utilize endow iowa?  

The Endow Iowa Tax Credit is available for individual income, corporation income, franchise tax, insurance, premiums tax and moneys and credits tax.  An individual can claim the credit for a gift made by a  partnership, limited liability company, S corporation, estate or trust electing to have the income taxed to the individual, based on the pro rate share of earnings from the pass-through entity. 

 

 

Can a gift of grain be eligible for endow iowa?  

An Iowa taxpayer giving a gift of grain to a qualified community foundation may be eligible for an Endow Iowa Tax Credit providing the dollars are placed into a permanent endowment fund for Iowa charitable causes.  For more information on making a gift of grain, please contact your local community foundation.

 

A donor who is going to establish an endow iowa eligible scholarship endowment fund for a graduate of an iowa high school, wants to also allow the recipient to choose to attend any college they wish (either inside oR outside the state).  The question of "charitable cause" comes into play--- the grants from the endowment would be to support an iowa student but if the check is written out to a school outside of the state for the benefit of an iowa student, is it still an iowa charitable cause?  

Summarized Response from IEDA:

The above scenario would probably be eligible for tax credits under Iowa code section 15E.305.  According to the example, there is no question as to the existence of a valid endowment gift, no question that the endowment is permanent, and no question that it is held by an endow Iowa qualified community foundation, which must be organized or operating in this state. The gift described would be permissible under these definitions.

 

Section 15E.305(1) also provides that a tax credit is "allowed only for an endowment gift made to an endow Iowa qualified community foundation for a permanent endowment fund established to benefit a charitable cause in this state." It is this provision which poses a potential problem to the scenario. The question that must be answered is whether the fund is established to benefit a charitable cause IN THIS STATE if the fund will pay for Iowa students to attend college outside of Iowa.  According to the facts provided, the "charitable cause" at issue is to help fund college educations for Iowa students. As described, the fund doesn't require students to leave the state, it merely allows it.  Perhaps more importantly, however, these are students already attending Iowa high schools (living here and attending school here) and they are benefitting from an endowment fund that has been set up and is operating here for their benefit. In addition, it might be the case that many of these students must leave the state to get the education or training they require for their career plans.   Thus, the facts described would, all things considered, probably constitute a charitable cause in this state, even if the checks are written directly to an institution outside of the state of Iowa for the benefit of an Iowa student.  The community foundation should take care in documenting that the student is an Iowa student however.

 

 

Additional Information 

The Iowa Economic Development Authority has prepared Administrative Rules for the Endow Iowa Tax Credit Program.  The Rules are available through the Department contact below, or through the State of Iowa Administrative Rules Coordinator, or the Iowa Administrative Code Web site at https://www.legis.iowa.gov/IowaLaw/AdminCode/agencyDocs.aspx.  The citation for the Tax Credit Rules is 261 Iowa Economic Development Authority, Chapter 47, Endow Iowa Tax Credits.


The contact at the Iowa Economic Development Authority for information on this program is: 
Peggy Russell

Iowa Economic Development Authority

200 East Grand Ave., Des Moines, Iowa 50309
Tel: 515.725.3009 

peggy.russell@iowa.gov