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The Community Development Assistance Act (CDAA) was created in 1985 by the Nebraska Legislature to encourage financial support by businesses to community betterment organizations in their efforts to implement community service and development projects in chronic economically distressed areas.
CDAA empowers the Department of Economic Development to distribute a 40 percent state tax credit to businesses, corporations, insurance firms or financial institutions or individuals that make eligible contributions of cash, services or materials to approved community betterment projects.
A non-profit community betterment organization may apply to the Department to become qualified to award tax credits to eligible contributors. Upon approval of a project by the Department, the community betterment organization can award a state tax credit to a business, corporation, insurance firm or financial institution or individual contributing to the project of up to 40 percent of the value of a contribution.
Five types of projects may qualify through the program. They include ones that provide:
- Employment training
- Human and medical services
- Physical facility and neighborhood development services
- Recreational and educational activities
- Crime prevention
Learn more about CDAA by reading these Success Stories:
- An applicant must be a village, city or county government; or a non-profit 501(c)(3) organization designated by the Internal Revenue Service.
- The area to be served by the project must be designated by the Department as an area of chronic economic distress.
An area of chronic economic distress is defined by the Legislature as an area that exceeds the state averages in any one of the following: unemployment rate in excess of the state average unemployment rate; or, per capita income below the statewide average per capita income; or, a population loss between the two most recent federal decennial censuses.
Interestingly, following this definition, almost all Nebraska communities currently qualify for CDAA tax credits. Please contact the CDAA coordinator with further questions.
Yes. No more than $25,000 in state tax credits can be approved per project. A total of $350,000 in state tax credits can be allocated each fiscal year by the Department.
After making an eligible contribution to an approved community betterment project, the business, corporation, insurance company, financial institution or individual must complete and submit Form CDAA 1 to the Department along with proof of the contribution. Form CDAA 1 is available from the community betterment organization or the Department. The contributing business or individual will then receive copies of the completed Form 1099NTC from the Department. Form 1099NTC is then attached to the contributor's tax return.
Effective October 1, 2009 any individual or sole proprietor receiving CDAA tax credits will be required to confirm their legal United States citizenship as required by Neb. Rev. Stat §§ 4-108 through 4-114. This is done using the United States Citizenship Attestation Form and can be found at the State of Nebraska Department of Administrative Services website at www.das.state.ne.us.
The credit must be claimed on the tax return for the year in which the contribution is made. Any tax credit balance may be carried over and applied against the individual or business firm's tax liability for the next five years immediately succeeding the tax year in which the credit was first properly claimed and allowed.
The state tax credit reduces the individual's or firm's state tax liability, in addition to any federal charitable deductions for which the contribution may be eligible.
Kevin Andersen, CDAA Coordinator
Nebraska Department of Economic Development
Community and Rural Development Division
P.O. Box 94666
301 Centennial Mall South
Lincoln, NE 68509-4666
800-426-6505 or 402-471-3775
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