CTO News

Tax Benefits of Charitable Giving

by Jeanne Wells Thill, executive director, CTO | Published March 17, 2022

Once upon a time, many charitable gifts were linked with the benefit to the deduction of taxes as much as the benefit of the dollars contributed to the charity. Regardless of the motivation of the donor, the recipients of the program, scholarship or food pantry initiatives recognize with gratitude the financial gifts of the donor and the direct impact on their spiritual or educational growth, and the welfare of their family.

Tax benefits are still tax benefits; and whether a tax deduction or a tax credit, the contribution from the donor benefits many others far beyond the tax benefits received.  The best charitable contribution, in terms of tax benefits, is to the Catholic Tuition Organization (CTO).  A donor receives 75% of their contribution back in the form of tax credits reducing the total amount paid to the State of Iowa at tax time.  Some donors calculate their total Iowa tax liability, then donate to CTO and totally wipe out their Iowa tax liability.  They say, “I’d rather support our Catholic school students than pay Iowa taxes.”

How does that work? First, look at line 38 on your Iowa income tax return.  If your income on line 38 is $76,450, you will owe $4,513 in Iowa taxes.  Consider giving CTO $6,000 and you will receive $4,500 in tax credits.  $4,513 – $4,500 = $13!  If you have already paid Iowa taxes through your regular paycheck, you will receive at least $4,500 back.  Gifts of grain have their own additional tax benefits as do gifts of appreciated stock.  When you donate appreciated stock, you do not pay capital gains tax either.  As always, ask your tax advisor about the benefits available to you when giving to the Catholic Tuition Organization.

Contributions to CTO provide tuition assistance to families who want to send their children to our Catholic schools, and who just cannot afford to do so.  For this current school year, $3.2 million in tuition assistance was provided to 2,000 students at our sixteen schools in the Diocese of Des Moines.  Since the inception of CTO, total tuition assistance has been $ 34.7 million!  As one mom recently said, “I am so grateful, I can’t even put into words how grateful I am that my daughter goes to this Catholic school.  She’s loved here.  They are all a part of her family.  That’s what Jesus wants…for us all to be loved.” 

Also posted in For Donors
The bottom line?  It's for the kids...
and their futures!
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