Tax-Advantaged Charitable Contributions

This strategy will help you maximize your charitable contributions and thus, reduce your modified adjusted gross income (MAGI) and lower your income tax liabilities.

Community Investment Tax Credits (CITCs)

Community Development Corporations (CDCs) are working hard every day in cities and towns across the Commonwealth of Massachusetts to spur affordable housing and job creation, incubate small businesses and revitalize neighborhoods.

Now there is a public-private partnership taxpayers can leverage that both accelerates this important economic development work and provides tax benefits in return – the Community Investment Tax Credit (CITC) program. The six-year, statewide program is reinvigorating neighborhoods by providing a 50% tax credit to inspire and reward donors to support CDCs across the state.

The CITC program utilizes the tax credit incentive to leverage private contributions to seed innovation and amplify community impact. Donations can be invested in affordable housing, job training, business development, neighborhood revitalization and other vital economic development projects. The donations will support only CDCs based in Massachusetts. The CDCs have been carefully selected for participation in this program, and are creating programs and economic development to benefit Massachusetts residents.

The CITC went into effect in 2014. The tax credit offers individuals, corporations and nonprofit institutions the opportunity to obtain a 50% Massachusetts state tax credit (rather than a deduction) and up to a 35% standard federal tax deduction (depending on your tax bracket) while investing in the economic development of the communities that need help most. You can learn more about the CITC here: http://www.macdc.org/community-investment-tax-credit.

Let's consider an example. A donor who contributes $10,000 to a CDC will receive both a $5,000 credit from the state and a federal tax deduction on the full amount of the donation. The donor can save as much as $3,500 on their federal tax return, leaving a final out-of-pocket donation of as little as $1,500 (depending on the donor’s tax bracket/filing status). The recipient CDC, meanwhile, receives the full $10,000.

There is a minimum annual contribution of $1,000. The maximum annual contribution is $2 million. Each year, up to $6 million in CITCs are available to donors and corporations that want to invest in this innovative economic development strategy and receive a tax credit. Once the $6 million is used, donors must wait until the following year to participate.

Claiming a CITC is not limited to residents and businesses located in Massachusetts. Nonresidents and businesses located outside of Massachusetts can make charitable contributions to CDCs and claim a Massachusetts CITC refund, too. To claim a CITC refund, you will need to file a Massachusetts non-resident income tax return. I would be happy to prepare and e-file a non-resident tax return on your behalf.

CDCs are doing a great job engaging local residents to make their lives better and create brighter futures for their communities. The CITC allows for new private revenue to meet the important public challenges CDCs are striving to address. It’s estimated this revenue will help generate an additional $66 million in new community investment over six years, a return that will benefit us all through economically stronger, more vibrant communities.

CDCs in the MetroWest area:

Coalition for a Better Acre

Coalition for a Better Acre logo

517 Moody St.
Floor 3
Lowell, MA 01851

Phone: 978.452.7523

Community Teamwork, Inc.

Community Teamwork, Inc. logo

155 Merrimack St.
Floor 2
Lowell, MA 01852

Phone: 978.459.0551

Housing Corporation of Arlington

Housing Corporation of Arlington logo

20 Academy St.
Room g-11
Arlington, MA 02476

Phone: 781.316.3451

Metro West Collaborative Development

Metro West Collaborative Development logo

79B Chapel St.
Newton, MA 02458

Phone: 617.923.3505

Somerville Community Corporation

Somerville Community Corporation logo

337 Somerville Ave.
2nd Floor
Somerville, MA 02143

Phone: 617.776.5931

South Middlesex Opportunity Council, Inc.

South Middlesex Opportunity Council, Inc. logo

79B Chapel St.
Newton, MA 02458

Phone: 617.923.3505

Waltham Alliance to Create Housing

Waltham Alliance to Create Housing logo

a/k/a SMOC
300 Howard Street
Freamingham, MA 01702

Phone: 508.620.2645

Visit The MACDC

logo-macdc-rd

To review the current list of all participating CDCs across Massachusetts that offer CITCs, click the logo above.

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