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What is the Tax Credit All About?
An exciting opportunity awaits you as a result of the Michigan Income Tax legislation.
Taxpayers can generate a total contribution to the Community Foundation for Muskegon County worth nearly three times its actual out-of-pocket cost! This astonishing effect is created via the Michigan Tax Credit for Community Foundations. Here’s the way it works—for both individuals and corporations.
The Community Foundation for Muskegon County can help.
The law permits a taxpayer to reduce Michigan Income Tax or Single Business Tax liability by a credit of 50% of the amount contributed to a community foundation, subject to a maximum credit of:
a. $100 for an individual filing singly (based on a $200 contribution)
b. $200 for a married couple filing jointly (for a $400 contribution)
c. $5,000 or 10% of tax liability before claiming any credits, whichever is less, for a resident estate
or trust (for a $10,000 contribution)
d. $5,000 or 5% of tax liability before claiming any credits, whichever is less, for taxpayers filing
Michigan Single Business Tax returns (for a $10,000 contribution)
The following examples illustrate what a gift to a Community Foundation might actually cost you under
this provision of the Michigan tax code.
EXAMPLES
INDIVIDUALS:
Assume a Federal Marginal Income Tax rate of 27.5%.
Amount of annual gift – $200.00
Michigan tax credit – $100.00
Federal tax savings – $27.50
Total tax savings – $127.50
Actual cost of the gift – $72.50
MARRIED COUPLE (filing jointly):
Assume a Federal Marginal Income Tax rate of 27.5%.
Amount of annual gift – $400
Michigan tax credit – $200
Federal tax savings – $55
Total tax savings – $255
Actual cost of the gift – $145
CORPORATION:
Assume a projected State Income Tax liability of $100,000 and a Federal Marginal Income Tax rate of 34%.
Amount of annual gift – $10,000
Michigan state tax credit – $5,000
Federal tax savings – $1,700
Total tax savings – $6,700
Actual cost of the gift – $3,300
Note: This information is for illustration only. Your particular tax situation should be discussed with your personal or corporate tax advisor. For further information, please contact the Foundation office at 231.722.4538