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TAX ADVANTAGES |
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| Sample Chart 1: ABC Corporation | |||||||||||||||||
| (Assume a Federal Marginal Income Tax Rate of 34%, | |||||||||||||||||
| a $10,000 gift, and a projected SBT Liability of $100,000) | |||||||||||||||||
| Impact of gift on Michigan state taxes* | $10,000 gift x .50 state tax credit = $5,000 | Savings from Michigan state taxes = $5,000 | |||||||||||||||
| Impact of gift on federal taxes | $10,000 gift - $5,000 SBT reduction x .34 marginal tax rate = $1,700 | Savings from Federal taxes = $1,700 | |||||||||||||||
| Total tax savings | $5,000 + $1,700 = $6,700 | Total tax savings = $6,700 | |||||||||||||||
| Actual cost of gift | $10,000 - $6,700 savings = $3,300 | Actual cost of gift = $3,300 | |||||||||||||||
| The actual cost of this $10,000 gift is only $3,300! | |||||||||||||||||
| *Tax credit is equal to the smaller of 50% of the amount contributed, 5% of net SBT tax liability, or $5,000 | |||||||||||||||||
| Sample Chart 2: Married Couple (Itemizers) | |||||||||||||||||
| (Assume a Federal Marginal Income Tax Rate of 25%, and a $400 gift) | |||||||||||||||||
| Impact of gift on Michigan state taxes** | $400 gift x .50 state tax credit = $200 | Savings from Michigan state taxes = $200 | |||||||||||||||
| Impact of gift on federal taxes | $400 gift x .25 marginal tax rate = $100 | Savings from federal taxes = $100 | |||||||||||||||
| Total tax savings | $200 + $100 = $300 | Total tax savings = $300 | |||||||||||||||
| Actual cost of gift | $400 gift - $300 savings = $100 | Actual cost of gift = $100 | |||||||||||||||
| The actual cost of this $400 gift to a community foundation endowment is only $100! | |||||||||||||||||
| **State tax liability must be $100 for single, $200 for married persons | |||||||||||||||||
| Sample Chart 3: Single Person (Non-Itemizer) | |||||||||||||||||
| (Assume a $200 gift, Federal Marginal Income Tax Rate would not apply) | |||||||||||||||||
| Impact of gift on Michigan state taxes** | $200 gift x .50 state tax credit = $100 | Savings from Michigan state taxes = $100 | |||||||||||||||
| Impact of gift on federal taxes | Not applicable, as this individual does not itemize. | Savings from federal taxes = $0 | |||||||||||||||
| Total tax savings | $100 + $0 = $100 | Total tax savings = $100 | |||||||||||||||
| Actual cost of gift | $200 gift - $100 savings = $100 | Actual cost of gift = $100 | |||||||||||||||
| Even in this example, a $200 gift would only cost the donor $100! | |||||||||||||||||
| **State tax liability must be $100 for single, $200 for married persons | |||||||||||||||||
| Donations are tax deductible to the fullest extent of the law. | |||||||||||||||||
| Donors should consult their advisors to assure they receive the best deduction that applies to their individual needs. | |||||||||||||||||
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