Endow Iowa Tax Credit FAQ

On this page are answers to some frequently asked questions about the Endow Iowa Tax Credit. For more information or to apply contact your local community foundation.

General Questions

The Endow Iowa Tax Credit program was created in 2003 by the Iowa Legislature and credits were awarded for the first time in 2004.

Endow Iowa Legislation

The most recent legislation relating to Endow Iowa Tax Credits provides $6 million in tax credits annually.

As long as the Iowa Legislature annually appropriates money for this program, funds will be available for tax credits.

If the annual $6 million tax credit cap has been met, your tax credit application will be added to the waitlist for a tax credit in the following calendar/tax year, pending annual appropriation of dollars to the program by the Iowa Legislature.

All of the compliance work done by the Iowa Department of Revenue regarding taxpayers claiming tax credits rely upon Social Security numbers. The current process hinges on the Social Security or federal identification number being provided; therefore, Social Security numbers will continue to be required for Endow Iowa Tax Credit applications.

The Endow Iowa Tax Credit is administered by the Iowa Economic Development Authority in conjunction with the Iowa Council of Foundations. If your questions are not answered on this site or in the Administrative Rules, please contact IEDA or the Iowa Council of Foundations.

Questions Related to Specific Circumstances

The Iowa Department of Revenue has considered a married couple to be two individuals, or two taxpayers; therefore, no matter if they file a joint Iowa return or a married filing separately on a combined return, each spouse could claim the maximum Endow Iowa Tax Credit, per year.

There may be some cases in which Endow Iowa Tax Credits could be awarded for qualified gifts from estates and used on Iowa tax returns (e.g. on a fiduciary income tax return or beneficiary's income tax return). There are other situations where Endow Iowa Tax Credits are not permissible for use (e.g. on an inheritance tax return). Please consult your tax/legal advisor for specific information related to your particular circumstance.

Taxpayers who do not itemize their deductions can still claim an Endow Iowa Tax Credit. While they will not receive any benefit in regard to their federal income tax return if the standard deduction is claimed on the federal return, they will still receive a benefit on their Iowa return. For example, an individual who donates $1,000 will still receive a $250 tax credit to be applied on their Iowa income tax return.

An Iowa taxpayer giving a gift of grain to a qualified community foundation may be eligible for an Endow Iowa Tax Credit providing the dollars are placed into a permanent endowment fund for Iowa charitable causes. For more information on making a gift of grain, please contact your local community foundation.

In this particular situation, the question of “Charitable Cause” comes into play. Here is a summary of the Iowa Economic Development Authority’s response:

The above scenario would probably be eligible for tax credits under Iowa code section 15E.305. According to the example, there is no question as to the existence of a valid endowment gift, no question that the endowment is permanent, and no question that it is held by an Endow Iowa qualified community foundation. The gift described would be permissible under these definitions.

Section 15E.305(1) also provides that a tax credit is "allowed only for an endowment gift made to an Endow Iowa qualified community foundation for a permanent endowment fund established to benefit a charitable cause in this state." It is this provision which poses a potential problem to the scenario. The question that must be answered is whether the fund is established to benefit a charitable cause in this state if the fund will pay for Iowa students to attend college outside of Iowa. According to the facts provided, the "charitable cause" at issue is to help fund college educations for Iowa students. As described, the fund doesn't require students to leave the state, it merely allows it. Perhaps more importantly, however, these are students already attending Iowa high schools (living here and attending school here) and they are benefiting from an endowment fund that has been set up and is operating here for their benefit. In addition, it might be the case that many of these students must leave the state to get the education or training they require for their career plans. Thus, the facts described would, all things considered, probably constitute a charitable cause in this state, even if the checks from the community foundation are written directly to an institution outside of the state of Iowa for the benefit of an Iowa student. The community foundation should take care in documenting that the student is an Iowa student, however.