Every April we think of taxes, and this year especially we are thinking about those negatively affected by the COVID-19, as well as what farmers will do with produce they aren’t able to sell during the season. One option is to make donations to the food banks around the state. While it’s a great thing to do for the community, it also may help with next year’s tax bill. During the 2016 General Assembly session, Virginia Farm Bureau supported legislation that created an income tax credit for farmers who make food crop donations to a food bank.
Virginia’s Food Crop Donation Tax Credit is an income tax credit for farmers who make food crop donations to a food bank. The guidelines have been released for the program and can be viewed online here.
The tax credit would equal 30% of the fair market value of the food crops donated by the person during the taxable year not to exceed an aggregate of $5,000 for any taxable year. The food crops are defined as grains, fruits, nuts, or vegetables. This tax credit’s aim is to help encourage more farmers to donate some of their crops to local food banks to help feed the hungry.
To receive the Food Crop Donation Tax Credit, donors must apply to the Department by completing Form FCD-1, which is available to download from the Department’s website www.tax.virignia.gov. This form and any supporting documentation must be completed and mailed no later than February 1 of the year following the taxable year during which the donations were made.
You may qualify for this credit if:
You’re a farmer who donates crops you grow to a nonprofit food bank in Virginia.
What is it?
An income tax credit equal to 30% of the fair market value of the crops donated. The total amount of credit for all crop donations you make during the year can’t be greater than $5,000. Carry forward any unused credits for 5 years.
Claim the credit against the following taxes administered by Virginia Tax:
- individual income tax
- corporation income tax
Are there any restrictions on how the donated crops are used?
- The food bank must use the donated crops in a way that provides food for the needy; and
- The donated crops can’t be used outside of Virginia, and can’t be used to pay for goods or services; and
- If the food bank decides to sell the donated crops, they can only sell them to the needy, other nonprofit food banks, or other organizations that will use the crops to provide food to the needy.
The food bank that receives your donation will complete Form FCD-2, Virginia Food Crop Donation Certification, and give the certification to you within 30 days of when you donated the crops.
Is there a cap?
Yes. The Virginia Department of Taxation can’t issue more than $250,000 in food crop donation tax credits per fiscal year.
To apply for this credit:
Complete Form FCD-1, and send it to the Department of Taxation by February 1. Late applications will not be eligible.
They will send you a letter certifying the credit by April 1.
Using the credit:
To claim the credit, complete the following and attach it to your return:
- Schedule CR, for individual returns – PART 28 – FOOD CROP DONATION TAX CREDIT
- Form 500CR, for corporate returns