How to Avoid the Taxman
Use this loophole to help a kid meet a dinosaur
When tax day cometh, Deborah Wood hopes you’ll choose to write a check for your Maryland taxes to her Chesapeake Children’s Museum rather than to Maryland Comptroller Peter Franchot.
True, Maryland needs your money; even now, as the General Assembly rushes to finish its work, thousands of good causes are competing for your every dime and dollar. Where your money goes, you’ll never know.
At Chesapeake Children’s Museum, you’ll know exactly where your money goes.
Tax credits are helping build a new classroom for cooking, woodworking, sewing and computer lessons at the Annapolis museum (www.theccm.org), tucked between Spa Road and Maryland Hall for the Creative Arts. Topping it off will be a rooftop observatory.
The choice is yours. It’s safe, legal and inspiring. Indeed, the Community Investment Tax Credit is the bright idea of the Maryland Department of Housing and Urban Development.
Each year, the 14-year-old Community Investment Tax Credit program directs $1 million in tax credits to community organizations.
Between 1997 and 2010, more than $13.6 million in tax credits have enriched 435 projects in education, community development, job training, neighborhood revitalization and more.
“The Community Investment Tax Credit allows individuals and corporations to support nonprofits that are working in their community,” says Carol Gilbert, Assistant Secretary for Neighborhood Revitalization. Her office decides which nonprofits will be accepted into the program and works with them to track the amount of qualifying gifts.
If the Chesapeake Children’s Museum isn’t your thing, you have plenty of other good choices throughout Maryland, including Arc of Southern Maryland in Calvert County.
4 Steps thru the Loophole
Step One: Make a gift to Chesapeake Children’s Museum or one of the 34 other nonprofit organizations authorized to benefit from the Community Investment Tax Credit program for the 2010 and 2011 tax years. You can donate as an individual or as a corporation. Your gift can be as little as $500 — or as great as $500,000. Consulting with your tax specialist can help you get — and give — the best benefit.
Step Two: Calculate your tax savings. If you owe $1,000 in Maryland taxes, a tax credit donation of $1,000 cuts your tax bill to $500.
You can avoid the taxman entirely, if you’re willing to pay a premium.
Thus, if you owe $1,000 in taxes and donate $2,000, you’d erase your state tax obligation — by paying twice as much to avoid paying taxes. But there’s also potential good news, above and beyond the goodness of your gift.
Step Three: Increase your tax savings. You can also claim federal and state deductions for the charitable contribution. The deductions won’t amount to half of your donation. But every bit helps.
Step Four: Take your credit. The Department of Housing and Community Development sends you a voucher to submit with your taxes for the year in which you give your gift. You don’t have to worry about rushing to get your gift in before April 18, which is this year’s tax filing deadline. You have five years to apply your Community Investment Tax Credit to your state tax bill.
Step Five: Smile. You’ve beaten the taxman.
Support a Dinosaur — Not the Taxman
Deborah Wood hopes you’ll choose to donate to the Chesapeake Children’s Museum in order to cut your Maryland tax bill.
“It’s all about learning through play,” says founder and executive director Wood of the mission of Chesapeake Children’s Museum. Exhibits feature local aquatic and land-dwelling creatures. A play area resembles a Chesapeake waterman’s boat complete with stuffed crabs.
The museum also offers workshops for children of all ages and their families on music, history and the critters that live in Spa Creek. Watching over it all is a giant smiling chicken-wire-and-foam dinosaur that kids love to climb.
Like all the exhibits and creatures in the museum, the gigantic fish tank at the front has a great story, one that conveys the whimsical resourcefulness that characterizes a museum bold enough to compete against the taxman.
One of a pair built for The Shark Lounge in Northern Virginia, the tank housed two sharks and a giant eel. When the lounge became a sports bar, the tanks were offered, free, to anyone who could take them away. Wood’s sister heard the story and volunteered the museum as a good home. Wood tried four delivery companies until one agreed to try the move.
“It turns out that the sharks were the easiest to move,” she says.
After several years of greeting — and sometimes frightening — visitors entering the museum, the gentle nurse sharks grew too big for the tank and were donated to a nearby shark rescue organization.
Sharks, dinosaurs and all, the museum has had a positive effect on the neighborhood, Wood says. “Just by being here, we’ve helped reduce crime, especially crimes done to and by kids.”
Students from Bates Middle School down the street are always stopping by on their way to and from school. “I like that the kids know they’re always welcome here,” Wood says.
In 2012, the museum turns 20 and also celebrates its 10th anniversary in the city-owned building that it shares with radio station WYRE, which operates in a glass booth behind the brightly painted reception desk.
This is the third time the museum has participated in the Community Investment Tax Credit program, and Wood says that the donations have been essential for reaching this milestone. “Our first time was the best,” she says. “I’d like to see us reach that again — and we could if more people knew about the tax alternative.”