FCD-1/FCD-2: Food Donation Tax Credit Application and Donation Certification (2024)
Virginia · Virginia Tax · Used for tax years 2024
Virginia Forms FCD-1 and FCD-2 are the Food Donation Tax Credit Application and Food Donation Certification. The donor completes FCD-1 to report donated food crops or wholesome foods and calculate the requested credit, while the receiving nonprofit food bank completes FCD-2 to ce
Who files this form
For tax year 2024, a person engaged in the business of farming as defined in 26 C.F.R. § 1.175-3 may apply for this credit for donating food crops they grew or wholesome food they produced in Virginia to a qualifying nonprofit food bank.
- The food donor completes Form FCD-1 to apply for the credit.
- The recipient nonprofit food bank completes Form FCD-2 to certify the donation.
- Both forms must be submitted to qualify for the credit.
Food crops are fruits, grains, nuts, or vegetables. Wholesome food must meet applicable federal, state, and local quality standards, even if it is not readily marketable because of appearance, freshness, surplus, or another condition.
The food bank must be located in Virginia, be exempt from tax under IRC § 501(c)(3), and have a principal purpose of providing food to the needy.
When it's due
For applications covering tax year 2024 donations, the text gives these dates in the year following the donation year:
- February 1: Submit Forms FCD-1 and FCD-2 to the Department of Taxation.
- March 1: The Department will contact you by this date if it needs additional information.
- March 15: Respond to any request for additional information. If you have not received acknowledgment of your application by this date, call (804) 786-2992.
- April 1: The Department will issue the credit by this date.
- April 15: If you have not received your credit certification by this date, call (804) 786-2992.
For a tax year 2024 return due on or before April 15, the instructions say you may need to submit an extension payment for any tax due or file an amended return after receiving credit certification. The credit must be approved before you claim it.
What you'll need
Submit:
- Form FCD-1, completed and signed by the donor.
- Form FCD-2, completed and signed by the recipient nonprofit food bank. If you donated to more than one qualifying food bank, include a separate FCD-2 from each organization with one FCD-1.
- A separate sheet for FCD-2 donation information if more space is needed.
Have your taxpayer identification number, contact information, entity type, and donation details available. Donation details include the food type, weight in pounds, and fair market value. FCD-2 also asks for donation dates and the valuation approach used. Describe wholesome food items briefly.
Keep, but do not submit, supporting records showing your eligibility and the amount claimed, including records showing how the food bank determined fair market value.
To claim an approved credit on a return, a corporation must file Schedule 500CR, an individual must file Schedule CR, and a pass-through entity must file Schedule 502ADJ. A pass-through entity allocating the credit must also file Form TCA and give each participant Schedule VK-1.
How to file
- Have each recipient nonprofit food bank complete Form FCD-2. The food bank must provide it to you within 30 days of the donation and is responsible for calculating fair market value.
- Complete one Form FCD-1. Enter the donation information, calculate 50% of the fair market value, and request the lesser of that amount or $10,000. Sign the declaration.
- Submit FCD-1, the required FCD-2 forms, and any enclosures by mail or fax:
Department of Taxation
ATTN: Tax Credit Unit
P.O. Box 715
Richmond, VA 23218-0715
Fax: (804) 774-3902
- Wait for notification of the allowable credit amount before claiming it on the applicable Virginia income tax return. If notification does not arrive before your return is due, the instructions allow filing during the extension period or filing without the credit and amending after notification. See the applicable return instructions for extension and amended-return details.
Pass-through entities allocating the credit must file Form TCA within 30 days after the credit is granted, but at least 90 days before participants file their income tax returns. Send it to the same address or fax number. Do not send Form TCA by both methods.
Common mistakes
- Claiming the credit before approval. You must receive certification from the Department before claiming it.
- Leaving out a certification or filing multiple applications. Submit one FCD-1 with a separate FCD-2 from each qualifying food bank.
- Requesting more than $10,000 for the taxable year. The total requested on FCD-1, Section 3, Line 3 cannot exceed that amount.
- Skipping business registration. Business taxpayers should be registered with the Department before completing FCD-1. If not registered, complete Form R-1.
- Sending records that should be kept. Retain eligibility and valuation records, but do not submit them with the application.
- Providing an email address when you do not want electronic communications. Entering an email address gives consent for emailed communications about the application.
- Overlooking Form TCA for pass-through allocations. Failure to file it may cause the credit claim to be disallowed or delay a participant's return. Mail or fax it, but do not do both.
- Overlooking the postmark. Without a postmark, the Department uses the date it receives the application to determine whether it met the February 1 deadline.
Questions people ask
How much is the credit?
The credit is 50% of the fair market value of eligible donated food, up to $10,000 per donor per taxable year. Total credits available statewide cannot exceed $250,000 per fiscal year. If applications exceed that cap, the Department allocates credits on a pro rata basis.
Who determines the value of the donated food?
The nonprofit food bank calculates fair market value and reports it on FCD-2. The instructions describe a federal approach based on the donation's facts and circumstances and an average price approach using USDA Market News Service wholesale prices. The food bank may use the least burdensome approach.
What if the credit is more than my tax liability?
Credit amounts that exceed your tax liability may be carried forward for 5 years.
Can the food bank send the donated food outside Virginia?
No. To qualify for the credit, donated food cannot be transferred for use outside Virginia. It must be used in connection with providing food to the needy and cannot be exchanged for services or purchased property. If sold, it must be sold to the needy, other nonprofit food banks, or organizations intending to use it to feed the needy.
Does a federal deduction for the donation affect my Virginia income calculation?
Yes. To the extent the credit is allowed, the instructions require an addition to federal adjusted gross income for individuals, or federal taxable income for corporations, for an amount claimed as a federal income tax deduction for the donation. See the applicable Virginia income tax return instructions for more information.