Introduction to IDA Tax Credits
Watch on the Kansas Commerce YouTube Channel
Strengthening fundraising for organizations by increasing individual economic prosperity
IDA allows administering organizations to provide qualified Kansans of low-income levels the opportunity to achieve financial self-sufficiency through education and asset development via special savings accounts. An Individual Development Account, also known as an “IDA,” is a savings account for low-income workers that can be used for small-business development, higher education, or the purchase of a first home.
Community charities, tribal and religious entities are eligible to develop programs in their communities through the selling of tax credits. The Kansas Department of Commerce oversees the program and allocates up to $500,000 in state income tax credits each calendar year. We also partner with Kansas Department of Revenue to administer the tax credits for qualified program contributors.
Watch on the Kansas Commerce YouTube Channel
IDA decreases the number of Kansans receiving public income support and the number of communities with a high concentration of poverty. The IDA Program raises the quality of life for all Kansans by increasing:
WHAT IS THE IDA PROGRAM?
IDA allows administering organizations to provide qualified Kansans of low-income levels the opportunity to achieve financial self-sufficiency through education and asset development via special savings accounts. An Individual Development Account, also known as an “IDA,” is a savings account for low-income workers that can be used for small-business development, higher education, or the purchase of a first home. Each time a Program Participant makes a deposit, the IDA Program contributes an additional deposit called a “match.” The match can be up to a 3:1 match on every dollar a participant saves. For example, if an IDA program offers a 2:1 match, each time a deposit of $25 is made, the program sets aside an additional $50.
Kansans with higher income levels can help others achieve financial independence by contributing to the program while receiving a 75% income tax credit for their donation to the program.
WHAT IS THE MAXIMUM AMOUNT OF TAX CREDITS THAT CAN BE APPLIED FOR?
The maximum amount of tax credits is $100,000. There is no minimum. However, if the total amount of requests for tax credits by community-based organizations is less than $500,000, additional tax credits may be awarded by Commerce to a previously selected Program Administrator.
HOW DO ORGANIZATIONS PAY THE APPLICATION FEE?
Application fees can be paid online here.
Paper checks are also accepted. Download and complete the Check Fee Payment Form and mail it to:
Kansas Department of Commerce
IDA Tax Credit Program
Attn: Sara Bloom
1000 SW Jackson Street, Suite 100
Topeka, Kansas 66612-1354
WHAT IS THE KANSAS DEPARTMENT OF COMMERCE’S ROLE IN SOLICITING TAX CREDITS?
It is the responsibility of the Program Administer (nonprofit organization) to solicit donations, complete the necessary paperwork and send the information to the Kansas Department of Commerce for processing. Kansas Department of Commerce will provide contact information to potential donors that are interested in donating.
WHAT HAPPENS IF AN ORGANIZATION DOESN’T USE ALL OF ITS ALLOTTED TAX CREDITS?
The Kansas Department of Commerce will evaluate the credit utilization of every project at the end of 12 months. If, after notice has been provided by Commerce, an organization is unable to provide written evidence that their remaining credits will be utilized, Commerce reserves the right to reduce the number of tax credits for that project and re-allocate those credits to other projects so they can be utilized before the expiration date.
WHO IS ELIGIBLE FOR TAX CREDITS?
The tax credit is for contributions made by business firms or individuals subject to Kansas income tax, Kansas privilege tax or the premium tax or privilege fees imposed on insurance companies. The minimum amount that can be donated is $250. There is no maximum amount.
ARE TAX CREDITS REFUNDABLE OR CARRIED FORWARD?
Tax credits that are not transferred or refundable and must be claimed in the year they are issued. Any credits that are transferred are not eligible for a refund and will be carried forward.
HOW DO PROGRAM DONORS RECEIVE THEIR TAX CREDIT CERTIFICATE?
Once the Kansas Department of Commerce makes the Individual Development Account Tax Credit award, Program Administrators will have the ability to download a copy of the tax credit certificate through the Kansas Department of Revenue submission website.