No More Public Charitable Contributions Tax Credits for Michigan

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As of New Year's Day, residents of Michigan can no longer claim charitable contributions to homeless shelters, food banks, community foundations, public universities or other nonprofits on their state income tax, says CBS Detroit. As part of the Public Act 38 budget cuts package, Gov. Rick Snyder repealed Section 261 of the Michigan Individual Income Tax Act, eliminating charitable giving credits. Here's information about these changes.

Which organizations are affected?

The Community Foundation for Southeast Michigan explains the three tax credits. The Public Contribution Credit covered institutions like public broadcasting stations, higher education facilities, colleges, universities, university fundraising groups, donations of publicly displayed artwork, public libraries and museums. The Community Foundation Credit provided credits for local civic organizations. The Homeless Shelter and Food Bank Credit reimbursed contributions made to rescue missions, food kitchens and pantries and organizations whose purpose is to provide accommodation for indigent persons.

How much is the charitable tax credit worth?

Michigan Legislature defines the three credits as 50 percent nonrefundable amounts that can only be used to reduce owed taxes. On each credit, married couples filing jointly can claim up to $200 for $400 in contributions. Individual filers receive up to $100 back. CBS Local said about 250,000 residents took advantage of the credit in 2010. Snyder eliminated the Michigan Business Tax as well. That tax included charitable giving credits. These credits saved taxpayers $40 million in income taxes. Gov. Snyder is hoping to recover some of those lost income tax funds to revitalize Michigan's struggling economy.

Can donations made last year be claimed?

Donations to nonprofit organizations made before Dec.31 can be claimed on 2011's income taxes. The Holland Sentinel says mailed donations made close to the end of the year cannot count because the payment might not have processed and a receipt issued in time. Electronic, Automatic Clearing House or credit card donations are easier to claim because they provide an immediate confirmation number for payment, even though the bill may not be paid yet. All receipts for charitable gifts should be saved.

How will this affect local organizations?

The charitable contribution credits have brought in $100 million for nonprofit organizations, says CBS Detroit. Of that amount, the 2011 Community Education/Foundation and Homeless Shelter/Food Bank Credits Report says the MBT contributed a significant portion to public institutions. The majority of IIT funds went to support homeless shelters and community food banks.

Marilisa Kinney Sachteleben writes about people, places, events and issues in her home state of "Pure Michigan."

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