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Message
LA tuition donation tax credit
Posted on 7/28/18 at 2:48 pm
Posted on 7/28/18 at 2:48 pm
4
Posted on 7/28/18 at 5:11 pm to lsumed
What is the limit of contributions? Do you know?
That is a no brainer.
That is a no brainer.
Posted on 7/28/18 at 5:26 pm to lsumed
reminds me of the conservation easement credits that some of my friends buy for federal taxes
This post was edited on 7/28/18 at 5:53 pm
Posted on 7/28/18 at 7:29 pm to lsumed
To be completely honest, programs like this are BS.
Posted on 7/28/18 at 7:43 pm to I B Freeman
No limit that I know of.
I do recall reading news releases in May that the IRS would be following "form over substance" policy when it comes to determining whether these state tax credit programs would truly qualify for federal deductions. Don't think they have issued actual guidelines yet..
I do recall reading news releases in May that the IRS would be following "form over substance" policy when it comes to determining whether these state tax credit programs would truly qualify for federal deductions. Don't think they have issued actual guidelines yet..
Posted on 7/28/18 at 8:47 pm to Mr.Perfect
quote:
To be completely honest, programs like this are BS.
Just like film credits.
Since they will not end film credits I intend to take advantage of every give away they dream up.
Posted on 7/29/18 at 1:56 pm to I B Freeman
You have been so wrong for so long on the film tax credits.
Posted on 7/29/18 at 6:33 pm to Mr.Perfect
I have been exactly right on film credits. They are film industry welfare and have fleeced taxpayers.
There is absolutely no debating that.
There is absolutely no debating that.
Posted on 7/29/18 at 9:49 pm to lsumed
We are looking hard at this for some of our clients.
We know for a fact that LDR is going to require the amount of the charitable deduction to be an addback on LA Schedule E. On a $10,000 donation, that would increase your LA tax by $600. Not a huge issue, but something to consider.
Note: This is based on conversations many practicioners have had with LDR's policy people. I have not seen any published guidance.
I can also tell you that there is a significant concern that the IRS will consider the tax credit "a thing of value". Charitable contributions deduction must be reduced by items of value that are received from the charity. This wasn't an issue pre-2018 since really, even if there was an issue with the charitable deduction, the credit could have been taken as a tax payment... so it was just a matter of what Sch A line to use.
With the 10K Sch A tax limitation... all of these "work-arounds" are getting a very close look.
You might be able to sneak it through in 2018, so there is a small window.
Now, even if the IRS does eventually limit the deduction to 5%, you still get that... and you also get the satisfaction of knowing that your tax dollars are going to a mission you believe in, instead of being pissed away by Baton Rouge. That, by itself, may make this program popular!!
We know for a fact that LDR is going to require the amount of the charitable deduction to be an addback on LA Schedule E. On a $10,000 donation, that would increase your LA tax by $600. Not a huge issue, but something to consider.
Note: This is based on conversations many practicioners have had with LDR's policy people. I have not seen any published guidance.
I can also tell you that there is a significant concern that the IRS will consider the tax credit "a thing of value". Charitable contributions deduction must be reduced by items of value that are received from the charity. This wasn't an issue pre-2018 since really, even if there was an issue with the charitable deduction, the credit could have been taken as a tax payment... so it was just a matter of what Sch A line to use.
With the 10K Sch A tax limitation... all of these "work-arounds" are getting a very close look.
You might be able to sneak it through in 2018, so there is a small window.
Now, even if the IRS does eventually limit the deduction to 5%, you still get that... and you also get the satisfaction of knowing that your tax dollars are going to a mission you believe in, instead of being pissed away by Baton Rouge. That, by itself, may make this program popular!!
Posted on 7/30/18 at 8:16 am to I B Freeman
Sure there is. The studies you post rely on the singular transactions of budget, pay, credit. They completely neglect all of the fringe items like people buying homes, people keeping families in the state, spouses moving in and the jobs they work, that money is taxed numerous times once it is introduced into an economy, people who travel in to visit the industry or simply to visit their families who moved here, ....I can go on and on.
Posted on 7/30/18 at 8:37 am to LSUFanHouston
Very helpful. They are asking for half of donation by mid August, so this decision would need to be made soon. Are you recommending it for your clients? I doubt there will be any clarity from the IRS in the next few weeks..
Worst case scenario is you don't get the fed deduction on 95%, and you have slightly overpaid your LA taxes...for a good cause. Best case saves thousands. Seems worth the risk.
Worst case scenario is you don't get the fed deduction on 95%, and you have slightly overpaid your LA taxes...for a good cause. Best case saves thousands. Seems worth the risk.
Posted on 7/30/18 at 8:57 am to lsumed
quote:
Very helpful. They are asking for half of donation by mid August, so this decision would need to be made soon. Are you recommending it for your clients? I doubt there will be any clarity from the IRS in the next few weeks..
Worst case scenario is you don't get the fed deduction on 95%, and you have slightly overpaid your LA taxes...for a good cause. Best case saves thousands. Seems worth the risk.
We are telling our clients all the issues. I personally believe that if it were to be denied, we at least would have reasonable cause to get out of any penalties, so if anything, it would just be the tax that is owed, plus interest.
Most of my bigger clients make all their donations in November and December anyways, so are taking a wait and see approach.
They probably want half the money by mid-august in order to pay fall tuition, so I understand that.
Posted on 7/30/18 at 9:21 am to LSUFanHouston
Am I missing something?
In the example in the OP we have a hypothetical $100,000 tax liability. If I then donate $100,000 here I reduce my liability to $60,000.
Aren’t I spending more money
In the example in the OP we have a hypothetical $100,000 tax liability. If I then donate $100,000 here I reduce my liability to $60,000.
Aren’t I spending more money
Posted on 7/30/18 at 9:48 am to Mr.Perfect
quote:
If I then donate $100,000 here I reduce my liability to $60,000.
You are using the donation to also offset your state liability, because of the state tax credit that is given with the donation.
Posted on 8/5/18 at 10:54 am to Mr.Perfect
Actually looks like you are coming out ahead, since you are getting the federal deduction.
For every $1,000 a person donates, that person gets a $950 income tax credit, plus a charitable deduction on his federal tax return equal to whatever his fed tax rate is.
Sounds like worst case is that it’s a 3-4% fee to essentially direct your state tax liability to kids in poverty to attend the schools of their choice.
For every $1,000 a person donates, that person gets a $950 income tax credit, plus a charitable deduction on his federal tax return equal to whatever his fed tax rate is.
Sounds like worst case is that it’s a 3-4% fee to essentially direct your state tax liability to kids in poverty to attend the schools of their choice.
Posted on 8/7/18 at 9:50 am to LSUFanHouston
Ok ---I am all over this!
Making my pledge today for my contribution.
I have worked with our CPA firm and two others---none knew the program existed until my call--and we are confident there is nothing Louisiana can do in 2018 to limit the credits without convening the legislature again. We are also pretty confident that the IRS will not limit this deduction because to do so would defeat the entire premise that 503Cs operate under. (How can you tell a charity that has been raising money all year that suddenly if their donors took the Louisiana credit the contributions are no longer deductible?) It may happen but IMHO the risk are low.
These program exists in different states but have statewide caps. One state has a $30 million cap that has already been reached in 2018 I am told.
It seems to me:
1) this is a no brainer for anyone with state income tax obligations over $10,000
2) this is a low cost, good thing for anyone wishing to help low income kids
Making my pledge today for my contribution.
I have worked with our CPA firm and two others---none knew the program existed until my call--and we are confident there is nothing Louisiana can do in 2018 to limit the credits without convening the legislature again. We are also pretty confident that the IRS will not limit this deduction because to do so would defeat the entire premise that 503Cs operate under. (How can you tell a charity that has been raising money all year that suddenly if their donors took the Louisiana credit the contributions are no longer deductible?) It may happen but IMHO the risk are low.
These program exists in different states but have statewide caps. One state has a $30 million cap that has already been reached in 2018 I am told.
It seems to me:
1) this is a no brainer for anyone with state income tax obligations over $10,000
2) this is a low cost, good thing for anyone wishing to help low income kids
Posted on 8/8/18 at 7:58 am to Mr.Perfect
quote:
Sure there is. The studies you post rely on the singular transactions of budget, pay, credit. They completely neglect all of the fringe items like people buying homes, people keeping families in the state, spouses moving in and the jobs they work, that money is taxed numerous times once it is introduced into an economy, people who travel in to visit the industry or simply to visit their families who moved here, ....I can go on and on.
I.B. likes to keep it simple. His math works out better that way and besides, all that other stuff you mentioned takes a lot of time to figure out and you can't exactly rush to judgement on TD.com if you spend all you time studying the details.
Posted on 8/8/18 at 5:22 pm to Snipe
Only the densest dumbasses on TD cannot see how the film credits cost taxpayers hundreds of millions and even the most optimistic multipliers of the spending cannot replace the revenue.
You are really looking stupid arguing otherwise.
You are really looking stupid arguing otherwise.
This post was edited on 8/8/18 at 5:26 pm
Posted on 8/9/18 at 6:52 am to I B Freeman
In looking at this, this credit actually saves the state money. According to the legislation on this credit, the programs are limited in how much they can give a child for a scholarship. The max value of the scholarship is 10-20% less than what the state is on the hook for when a kid goes to public school.
So it's a cost savings to the state and a kid in poverty goes to the school of the parent's choice. Not to mention the financial benefit to a taxpayer.
So it's a cost savings to the state and a kid in poverty goes to the school of the parent's choice. Not to mention the financial benefit to a taxpayer.
Posted on 8/9/18 at 8:27 am to tigahdad04
quote:
In looking at this, this credit actually saves the state money. According to the legislation on this credit, the programs are limited in how much they can give a child for a scholarship. The max value of the scholarship is 10-20% less than what the state is on the hook for when a kid goes to public school.
The vouchers are the same way. $8,500 is generally less than what the MFP per person cost is.
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