Video Transcript – Tax Spotlight: Kathy Hurley
[Graphic: What is a tax credit?]
[Kathy Hurley, lecturer in Department of Accountancy]: So a tax credit is, you get a direct dollar-for-dollar reduction in how much you owe in your taxes. A tax deduction, on the other hand, is taken off before you calculate your tax liability, so it reduces your adjusted gross income. So it is based then on your tax bracket for how much it’s actually worth.
[Graphic: Why should people use a tax credit?]
[Kathy Hurley]: So for the filer, a credit is the most beneficial because it reduces how much you owe the state dollar by dollar. So if you get a credit of $500, you take $500 off of the amount you owe the state in taxes.
[Graphic: How does the Idaho education tax credit benefit Boise State?]
[Kathy Hurley]: So not only is the Idaho Education tax credit great for the donor, but it’s also great for the institution. So for Boise State University, if you make the donation to the school you’re going to benefit student scholarships. So academics, clubs, athletics, anything that we are funding at the university goes to benefit our students so that they can get a better education and so that they can be involved in more activities.
[Graphic: Why is a tax credit better than a deduction?]
[Kathy Hurley]: So tax credits are amazing because they are going to save you more money than a tax deduction. And one of the things about these Idaho tax credits that are great is with the new federal laws, many people that make donations will not be able to reduce their tax liability on the federal tax return. But, on your Idaho tax return, they matter. They will reduce your how much you owe in Idaho taxes.
[Graphic: How much money can I save on my taxes?]
[Kathy Hurley]: So the benefit for corporations is a $10,000 donation can get up to a $5,000 tax deduction. So for any of these deductions, it is half of what you owe. Or $5,000 for a corporation, $1,000 if you’re married filing jointly, or $500 for anyone else.