Tax break program available for ESU Memorial Union contributors
By John Giffin (Contact)
Tuesday, February 21, 2012
Those who donate to help complete the Emporia State University Memorial Union are eligible to receive tax breaks.
In 2009, students voted to contribute $18.5 million to the cost of renovations and expansion of the Memorial Union. The ESU Foundation is seeking $2.5 million in private donations. The total cost of the Memorial Union renovation and expansion is $22.5 million. Last year, the Foundation collected $700,000 in donations.
Starting in 2012, the State of Kansas is offering tax credits for donations to the Memorial Union. The tax credits from the state equal 50 percent of the total donation. There are tax credits on a first-come, first-serve basis for the first $1 million donated. The tax credits for the donations expire Dec. 31. The donations need to be made in the form of cash, securities, personal or real property that can be converted to cash.
In 2007, the Kansas legislature created the Kansas Educational Institution Long-term Maintenance Program. The program gives a state tax incentive for donors when donating to in support of state university maintenance needs.
“It’s kind of the state’s way of doing matching funds,” said Pool and Wright Chartered Certified Public Accountant Tim Wright. “ ... The Memorial Union for 2012, they have half-a-million of dollars in tax credits that are 50 percent tax credits.”
Once money is donated to the ESU Foundation, the Foundation will turn in the tax paperwork. Once the paperwork is processed, donors will receive a letter in the mail from the Kansas Department of Revenue. That letter certifies the 50 percent tax credit. On top of the State of Kansas tax credit, donors will receive a deduction on their federal return.
“Even though you’re getting this 50 percent tax credit, you still get to deduct this donation on your tax return, just like you would on other donations, presuming you could itemize,” Wright said. “If someone is in the 35 percent tax bracket, a person can get a 50 percent tax credit plus 35 percent savings when deducting the contribution on my federal. That’s 85 percent. Plus Kansas’ highest rate of 6.45 percent. We’d be up to 91.4 percent back. So it would only cost you 8 1/2 percent.”
For example, if a individual, non-profit organization or business that pays corporate income tax, insurance premium tax and bank privilege tax gives a 10,000 gift the total out of pocket expense after the tax credit and federal deduction is $2,831. The total out of pocket expense without the tax credit is $6,081.
The areas included in the Memorial Union renovation project that donors would be eligible to receive are gifts to the admissions office, the Office of Internal Education, the Career Services Office, and for donors that wish to name a room in the Memorial Union.
“I think there are a lot of people around Emporia that would not normally consider those to be even be candidates for that,” Wright said. “With these tax credits and stuff, if a person gave $20,000 really by the time they get all the tax breaks, it only costs them $5,600. There’s probably some people that would consider giving $5,600 to ESU that could name a $20,000 room.”
All donors should discuss the donations with a tax professional before giving.