New Application Form for Endow Iowa Tax Credit

May 14, 2007 | Roger McEowen


The Iowa Department of Economic Development (IDED) has produced a new application form for taxpayer use when claiming the Endow Iowa Tax Credit.   The revised form contains space for information on up to two donors, and includes space to list the taxpayer’s social security number or employer identification number (the revised form: EndowIowaTaxCredit.pdf).

The credit is available for tax years beginning after 2003, and was made permanent in 2006.  The total amount of tax credits is capped at $2 million per year plus a percentage of the adjusted gross receipts tax paid by excursion gambling boats and racetracks as specified by Iowa law.   The credit is 20 percent of a taxpayer’s endowment gift to a permanent endowment fund established by a qualified community foundation to benefit a charitable cause in Iowa. 

The IDED is responsible for registering and authorizing and controlling the distribution of the credits.  The maximum amount of tax credits granted to any particular taxpayer per year is limited to 5 percent of the aggregate amount of total tax credits authorized (i.e., .05 x $2,000,000 =  $100,000).  $200,000 of the $2 million that is authorized annually is reserved for endowment gifts of $30,000 or less.  If those aren’t distributed by September 1 of any particular year, any balance then becomes available to other applicants.
Eligible taxpayers include individuals (including pass-through entities) and C corporations.  A member, shareholder, etc., of a pass-through entity can claim the credit for a gift made by the pass-through entity if the individual is otherwise taxed on the income flowing through the entity through them.    In that event, the credit is based on the pro-rata share of income from the pass-through entity flowing to that individual. 

The credit is non-refundable, but taxpayers may carryforward any amount of unused credit for five years.  No carryback is allowed.  The tax credit is not transferable, and is entered on Form IA 1040, line 54, via Form IA 148.

If all available tax credits for 2007 have been awarded, qualified gifts made during the remainder of 2007 will receive tax credit authorization for use in 2008.