Michigan Income Tax Homeless Shelter Credit Amended to Allow In Kind Contributions of Food
Public Act 207 of 2008, effective July 11, 2008 and operative for the 2008 and later tax years, amends the credit for contributions to a homeless shelter, food kitchen, food bank, etc., to provide that when calculating the amount of the credit allowed a taxpayer may include as a cash contribution an amount equal to the value of food items contributed (if the food items are contributed in conjunction with a program in which a vendor makes a matching contribution of similar items) in the tax year to a homeless shelter, food kitchen, food bank, etc. and is equal to 50% of the sum of the cash amount and the value of food items so contributed.
Previously, the credit was limited to 50% of the cash amount of contributions. The bill also provides that the maximum credit allowed taxpayers ($100 for single taxpayers, $200 for those filing a joint return) includes the value of food items contributed.
The amendment also provides that for a resident estate or trust, the credit is limited to 10% of the taxpayer's liability or $5,000, whichever less, for total cash contributions made and including the value of food items contributed.
Has the State determined the guidelines for the program that vendors are going to have to follow in order for taxpayers to get this deduction?
What type of documentation are taxpayers going to need support the contribution for tax purposes?
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Fred,
Neither the law nor the legislative analysis provide any guidance for the program that vendors are going to follow so that the donors, the taxpayers, can claim the credit. Treasury will need to providence guidance.
The following is from the legislative analysis:
The bill would amend the Income Tax Act to include the value of donated food items in a credit allowed for cash donations to a food bank or homeless shelter, for the 2008 tax year and each subsequent tax year. Currently, subject to applicable limitations, a taxpayer may credit against the income tax 50% of the cash amount the taxpayer contributed during a tax year to a shelter for homeless people, food kitchen, food bank, or other entity located in this State, whose primary purpose is to provide overnight accommodation, food, or meals to people who are indigent, if a contribution to that entity is tax deductible for the donor under the Internal Revenue Code.
Under the bill, a taxpayer could claim a credit equal to 50% of the sum of the cash amount and of the value of food items contributed, beginning with the 2008 tax year. The amount of this credit presently is limited to $100, or $200 for a husband and wife filing jointly, for total cash contributions made to an entity described above. For a resident estate or trust, the credit may not exceed 10% of the taxpayer's tax liability for the tax year before any credits are claimed, or $5,000, whichever is less, for total cash contributions made. Under the bill, these limits would apply to total cash contributions made and the value of food items contributed. MCL 206.261
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Ed,
Would this amendment to the credit also include 4-H livestock sold at county fairs that would ordinarily be consumed for personal use or resold but instead are donated to food banks?
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YES, to the intent it is food.
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