George,

I would like to share with your readers a new (effective January 1, 2000) political contribution tax credit for VA taxes which has not received a lot of publicity.

VA House bill 2749 allows individuals a tax credit equal to 50% of the political contributions made to candidates for state and local offices, not to exceed $25 for an individual taxpayer or $50 for taxpayers filing a joint return.

The credit is allowed for contributions to political candidates in a primary, special, or general election for local or state office held in the year in which the contributions are made. The credit is non-refundable, and unused credits cannot be carried over to subsequent years. The credit is claimed on VA Schedule CR, part XXIII.

To give an example, if a married couple gives Charles Martin a $100 contribution, the Commonwealth of Virginia allows an offsetting $50 credit against taxes due on the 2001 VA return.

A credit is more valuable than a deduction, as it offsets taxes dollar for dollar, as long as taxes are owed.

Thanks,

Tom Stott, CPA (electronic mail, October 5, 2001).