The IRS announced new regulations that will impact how SGO donations are deducted on the federal tax return. There will be public hearings in the fall, but if the proposed language is made permanent, taxpayers who itemize will only be able to claim 50% of their Indiana SGO gifts as a charitable deduction. In the past, taxpayers could claim the total contribution, but the new language limits the amount that can be claimed to the portion that is NOT granted a state or local tax credit. In other words, an SGO donation is eligible for a 50% state tax credit and a 50% federal charitable deduction for those who itemize.
The new IRS proposal does not impact the state tax credit in any way. It only deals with the way that the donation is treated for federal tax purposes. The suggested effective date in the regulation is for donations received AFTER AUGUST 27, 2018. As it is written, any donations received on or before August 27, 2018, would receive the same federal tax treatment as they have in the past.
Is is important to make sure that your websites are updated and that donors are informed of this proposed change. While it will not be final until after the public hearing, donors need to understand that this may impact any donations made to the program after 8/27/2018.
We will be providing information soon on where you may submit public comments if you wish to do so.