COMMUNITY INVESTMENT TAX CREDITS (CITC) support 501(c)(3) nonprofit organizations by awarding allocations of State tax credits for use as incentives to attract contributions from individuals and businesses to benefit local projects and services.
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Pyramid Atlantic used tax credits to raise matching
funds for a National Endowment for the Arts grant
to support visiting artists working with Maryland
high school students and teachers.
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Community Investment Tax Credits complement other State funding programs which offer resources to assist communities with revitalization efforts. As part of an annual, competitive application process, 501(c)(3) nonprofit organizations apply to the Maryland Department of Housing and Community Development for tax credit allocations. Over the past 12 years, the Community Investment Tax Credit program has leveraged nearly $20 million in charitable contributions to 300 projects (Directory of Projects) across the State.
Nonprofit organizations utilize the tax credits as incentives for individuals and businesses to
donate money, goods or real property to support operational and programmatic
costs associated with specific, approved projects delivering services to
communities across Maryland.
Businesses and individuals that donate to qualified organization’s approved project(s) can earn tax credits equal to 50% of the value of the money, goods or real property contribution. These tax credits are in addition to the deductions on both Federal and State taxes as a result of the charitable contribution. Based on the income and tax structure of the individual tax payer or business, the net cost of the donation could be as low as $0.27 for every $1.00 contributed.
Individuals and businesses must use the tax credits against taxes owed for the year in which the contribution was made and may not be used retroactively for taxes from a prior year. Any individual or business contemplating making a donation is encouraged to consult with their accountant or tax professional for information about their specific tax benefits.
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WHO CAN APPLY
Nonprofit organizations, designated a 501(c)(3) organization by the Internal Revenue Service, are eligible to apply for Community Investment Tax Credits to support a project or activity that is either located in or serving a community in a
Priority Funding Area. Nonprofits must maintain their charitable organization status with the
Maryland Department of Assessment and Taxation (SDAT), as well as, provide an official Certificate of Status from SDAT.
Sample Application (PDF)
Note: This application is for reference only. Applications must be submitted
electronically and only after attending the required application training.
Once awarded tax credits, nonprofit organizations are required to submit a
Semi-Annual Report (PDF)
(MS WORD) in January and July providing information on:
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Project activity/status
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Use of tax credits/contributions received
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How the organization is marketing the tax credits
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ELIGIBLE PROJECTS
Projects must be located in or serve residents of a Priority Funding Area and typically involve activities
such as:
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Education and Youth Services
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Housing and Community Development
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Job and Self-Sufficiency Training
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Enhancing Neighborhoods and Business Districts
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Arts, Culture and Historic Preservation
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Economic Development and Tourism Promotion
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Technical Assistance and Capacity Building
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Services for At-Risk Populations
The current Directory of Projects provides further information on specific projects across the State.
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Sandtown Habitat’s tax credits are raising contributions to
construct homes for purchase by low and very low-income
families in the Sandtown-Winchester neighborhood of
Baltimore City. |
Contributions of money, goods or real property worth $500 or more are eligible for tax credits. Contributions of services or labor are not eligible. Individuals and businesses may claim a maximum of $250,000 in tax credits per year, representing $500,000 in contributions.
Individuals and businesses making donations are required to
complete a simple two-page form (PDF) and submit it to the nonprofit organization receiving the contribution, along with documentation of the value of the contribution. Individuals or businesses that wish to donate real property must contact the Maryland Department of Housing and Community Development’s Community Investment Tax Credit Program for approval prior to making the donation.
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Businesses: Any entity that conducts a trade or business in the State and is subject to: the State income tax on individuals or corporations; the public service company franchise tax or the insurance premiums tax. These types of entities generally include corporations, public utility companies, insurance companies, financial institutions, S corporations, partnerships, sole proprietorships and limited liability corporations.
Individuals: An individual is a resident of Maryland if the individual is domiciled in Maryland on the last day of the taxable year or if the individual maintains a place of abode in Maryland for more than six months of the taxable year and is physically present in the State for 183 days or more during the taxable year.
Individuals and businesses that make charitable contributions benefit by:
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Reducing their Maryland tax liability
- Helping a local nonprofit organization achieve an essential community goal
- Making a targeted community impact
- Improving community relations and increasing their visibility
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USEFUL LINKS
The following information may be useful to both individuals and businesses making contributions, as well as nonprofit participants in the Community Investment Tax Credit program. This information is for reference only and any individual or business contemplating making a contribution, that has questions about their specific tax advantages, is encouraged to consult with their accountant or tax professional.
FOR MORE INFORMATION
Karen Forbes
Assistant Director
Community Access and Partnership
410-209-5800
forbes@mdhousing.org
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World Arts Focus used tax credits to raise contributions for a capital campaign to renovate an under-utilized warehouse and create Joe's Movement Emporium - a new community performing arts center and anchor for the Prince George's County Gateway Arts District.
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