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December 21, 2006 Tax-deductible Charitable Giving Reported by North Dakotans Up in 2004 Donations reported as itemized deductions on individual federal tax returns to charities, humanitarian causes and public/private institutions, including religious organizations, saw an increase between 2003 and 2004 in North Dakota. Charitable contributions reported by North Dakotans as itemized deductions on their individual federal income tax returns totaled $177.3 million in 2004, compared with $159.4 million in 2003, an increase of 11.2 percent. This month’s “Economic Briefs,” a monthly publication from the North Dakota State Data Center at North Dakota State University, focuses on the charitable nature of North Dakotans by looking at charitable contributions reported as itemized deductions on federal individual income tax returns. The Internal Revenue Service (IRS) publishes select state data (including tax-deductible contributions or donations) from individual tax returns filed the previous calendar year. However, there are important limitations with the use of IRS data to explore trends in donations or charitable giving in North Dakota. First, only a small number of North Dakotans itemize their deductions on their federal individual income tax return. According to 2004 tax data, 18.4 percent of North Dakota taxpayers chose to itemize deductions on their tax returns (second lowest percentage in the nation). A mortgage is one of the primary reasons for itemizing deductions and 36.3 percent of households in North Dakota are owner-occupied with a mortgage (third lowest proportion in the nation). This is paired with the fact that North Dakota has the 14th highest proportion of renters in the nation (32.5 percent of all households). For taxpayers who take the standard deduction, no details on their donations are available through the IRS. Second, itemized deductions only capture giving that is tax deductible. Therefore, one should be cautious in using IRS data to draw conclusions regarding how North Dakota compares with other states regarding charitable contributions. Nonetheless, the IRS database is one of the few uniform means of tracking contributions during a time period and by state. For North Dakota, individual federal income tax returns with contributions as itemized deductions showed contributions averaged $3,735 per return in 2004, a 5.3 percent increase from $3,546 in 2003. “We have seen a systematic rise in charitable contributions in our state since the terrible flood years of 1996-97 based on federal tax returns,” said Richard Rathge, State Data Center director. Nationally, average charitable contributions (reported as itemized deductions) increased 7.5 percent to $4,012 in 2004, which is up from $3,731 in 2003. ### Source: Richard
Rathge, (701) 231-8621, richard.rathge@ndsu.edu
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