Obscure Tax Law Could Aid Schools Donation ‘A Well-Kept Secret,’ Citizen Says

The thought of yet another library bake sale or classroom Christmas bizarre makes Polly Mire cringe.

Every year, the Sagle taxpayer and her accountant husband tirelessly attempt to educate Idaho residents about an easier way to raise money for local schools and libraries.

It’s an obscure line on Idaho tax forms allowing residents to deduct 50 percent of a donation to an accredited school or library from the taxes they owe in April.

“It’s a well-kept secret,” Mire said. “Because nobody understands it.”

Mire wrote The Spokesman-Review about the tax credit last week after reading an article debating the pros and cons of school fund raising.

The Idaho Tax Credit, Mire argues, is the easiest form of fund raising around. Unfortunately, many people confuse it with charitable donations and don’t recognize that it effectively funnels more tax money into the local region.

An individual can give a prescribed amount to a local school or library, then deduct half of that from the state taxes they owe on April 15.

It’s particularly advantageous for those in the higher tax brackets.

A couple in the 36 percent tax bracket, for example, could give a local school $200. They would get back $100 in the form of a tax credit. Then, when itemizing, they would receive an additional $72 credit from federal income, and an additional $16 credit from Idaho income, leaving their total out-of-pocket cost a mere $12.

“The schools are in such need up here and we just mindlessly send this money down to Boise and never see much of it,” Mire said.

The tax credit, first enacted in 1976, not only affords more local control of tax money.

“It’s a double-dipping credit, actually,” said Nancy Seghi, taxpayer services specialist with the Idaho Tax Commission.

It’s called double dipping because aside from the tax credit given by the state of Idaho, the donation also may be deducted from federal returns.

An individual can receive up to $50 credit, a couple up to $100 and a corporation can get $500 credit. But the donation must be made before Dec. 31.

For more information, contact a tax preparer, the Idaho State Tax Commission or look to Line 41 on the Form 40 titled “Credit for contribution to educational entities.”

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