VIRGINIA ED TAX CREDIT

[TAXMAN]

For my Virginia friends. TP gave stock valued at 11k to 501c3 organization that invest in Virginia Education Improvement Scholarships Tax Credit Program. Virginia give TP a tax credit of 6500.00 based on a 10k contribution. The way I see this is a federal deduction of 10k and a state deduction of 3500. Would you agree or not? Manny thanks as I have not run into this before.

[Possi]

The VA Sch A does not get changed because of the tax credit. 

The taxpayer gets the tax credit AND the complete federal Sch A charitable contribution amount. Do not reduce the VA charitable contributions.

I called Richmond and was reassured that VA conforms to the Sch A charitable contributions. 

I have had this before, but not as much money, and it never occurred to me to reduce the Sch A charitable contribution, so I'm glad I was right! 

[TAXMAN]

So what you are telling me is that I get a full federal deduction of 10k on the sch a and a full 10k on Va sch a along with the va tax credit of 6500. Just sounds to good to be true. Thanks

 

[Possi]

21 minutes ago, TAXMAN said:

So what you are telling me is that I get a full federal deduction of 10k on the sch a and a full 10k on Va sch a along with the va tax credit of 6500. Just sounds to good to be true. Thanks

 

Yes, that is correct. It's a great incentive, isn't it? 

It is true.  

[Hahn1040]

TCJA changed this:

from Pub 526

State or local tax credit. If you make a payment or transfer property to or for the use of a qualified organization and receive or expect to
receive a state or local tax credit in return, then the amount treated as a charitable contribution deduction is reduced by the amount of the state
or local tax credit you receive or expect to receive in consideration for your payment or transfer, but an exception may apply. If an exception doesn’t apply, you must reduce your charitable contribution deduction even if you can’t claim the state tax credit in the year.

the deduction on federal is reduced by the amount of the credit.  There is no adjustment for state because it has been reduced on federal.

perhaps your instance is different.  I have a couple of people who get the Neighborhood Assistance Program credits and this applies to them.

[TAXMAN]

Thanks Hahn1040. I had forgot about that rule being in place. TP still comes out way ahead. Thank you for calling that to my attention.