Businesses or individuals who contribute to qualified organizations' Community Investment Programs can earn credits for a portion of the value of the money, goods or real property contribution.
Community Investment Tax Credits support nonprofit organizations serving as incentives to attract contributions from individuals and businesses to benefit local projects and services.
The credit may be taken against corporate income tax, personal income tax, insurance premiums tax or public service company franchise tax. However, the same credit may not be applied to more than one tax type.
To qualify for the credit:
ontributions of money, goods or real property worth $500 or more are eligible for tax credits. Contributions of services or labor are not eligible. Individuals and businesses may claim a maximum of $250,000 in credits per year, representing a contribution of no more than $500,000.
For any tax year, the sum of all Community Investment Tax Credits, including any carryover credits, may not exceed the lesser of $250,000 or the total amount of tax otherwise payable by the individual and/or business for the tax year. Excess credits may be carried over for five (5) years.
How the credit is calculated:
The credit is 50% of the value of the approved donation. Each business or individual may claim a credit of up to $250,000. An electronic tax return supporting Form 500CR must be filed to claim this credit against the Maryland income tax, for tax years beginning after December 31, 2012.
Important Note: While many individuals claim this credit on Form 502, this is still a business tax credit. Taxpayers must file electronically to use Form 500CR. This credit does not appear on Form 502CR.
See Form 500CR Instructions for specific line-by-line instructions.
Documentation required:
A copy of the required approval from the Department of Housing and Community Development must be attached to the appropriate electronic Maryland Income Tax Return - Form 500 for Corporations, Form 510 and Form 510 Schedule K-1 for Pass-Through Entities, and Form 502 for individuals. The Form 500CR section of the electronic return must also be completed.
Insurance premiums tax:
The contributor and the non-profit partner must complete the Certification of Contribution for Tax Credit and submit it to the Maryland Department of Housing and Community Development along with a copy of the check or documentation of the value of donated goods. Businesses claiming the credit against this tax must include their North American Industry Classification System (NAICS) number in the space provided on that form.
Public service company franchise tax:
Form AT3-74 must be submitted with the franchise tax return (SDAT Forms 11 or 11T).
Contact:
Department of Housing and Community Development
Division of Neighborhood Revitalization
10 N. Calvert Street, Suite 444
Baltimore, MD 21202
Phone: 410-260-5800
E-mail:citc@mdhousing.org