An individual is allowed an income tax credit for making a charitable contribution in the form of a planned gift to either a qualified nonprofit organization or to a qualified endowment fund.
The credit is equal to 40% of the contribution, up to a maximum credit of $10,000 (or $20,000 if married filing a joint return). An adjustment must be made to increase North Dakota taxable income by the amount that the contribution reduced the individual’s federal taxable income. If the credit exceeds the individual’s tax in the tax year in which the contribution is made, the excess credit may be carried over and used on subsequent tax years’ returns for up to 3 years.
Eligibility: A planned gift is a gift that qualifies as a charitable contribution for federal income tax purposes and is made using one of the following gifting methods:
- Charitable remainder unitrust (CRUT)
- Charitable remainder annuity trust (CRAT)
- Pooled income fund trust
- Charitable lead unitrust (CLUT)
- Charitable lead annuity trust (CLAT)
- Charitable gift annuity
- Deferred charitable gift annuity
- Charitable life estate agreement
- Donation of a paid-up life insurance policy
A qualified nonprofit organization is a tax-exempt charitable organization under federal income tax law that meets either of the following sets of criteria:
- It is incorporated or established in North Dakota and maintains a physical location in North Dakota.
- It is incorporated or established in a state bordering North Dakota; maintains a physical location outside North Dakota that is within 5 miles of a North Dakota city with a population of 5,000 or more that does not have a hospital; and supports or benefits a hospital, nursing home, medical center, or any combination of these.
A qualified endowment fund is a permanent, irrevocable fund that is:
- Held by a qualified nonprofit organization (or by a bank or trust company on behalf of the qualified nonprofit organization)
- Comprised of cash, securities, mutual funds, or other investment assets
- Established for a specific religious, educational, or other charitable purpose
- Only allowed to disburse the income from, or the increase in value of, the assets contributed to the fund
Filing Requirements: To claim the credit, complete Schedule ND-1PG and Schedule ND-1TC and include them with the North Dakota individual income tax return, Form ND-1. See Individual Income Tax for forms.
Century Code Reference: N.D.C.C. § 57-38-01.21