Individual Development Account (IDA) Program

Individual Development Accounts are matched savings accounts that can help you go back to school to get a degree/technical certificate, purchase a home or start/expand a small business.  Participants open accounts at participating financial institutions in order to save a maximum of $1,000 and CAA will match that savings $3 for every $1 saved for home ownership (you save $1,000, CAA gives you $3,000) or $2 for every $1 saved for education or small business (you save $1,000, CAA gives you $2,000) to be used on an approved purchase.  Participants must be in the program and save each month a minimum of $20 for a minimum of 6 months.

Eligibility guidelines:

  • 200% of poverty or below (see chart)
  • One adult member of the household must have earned income–wages–from formal employment or self-employment
  • Must be able to open account at participating financial institutions:                
          - TLC Credit Union-Lenawee County               
          - American 1 Federal Credit Union in Jackson and Hillsdale counties)
  • Must be willing to review and address any credit issues that may keep you from being successful in your purchase
  • Must be in the program a minimum of 6 months and a maximum of 3 years
  • Must attend financial management classes related to your intended purchase:               
          - homebuyer education,                
          - business education or individual sessions related to going to college or technical school

 

Individual Development Account Tax Credit FAQ

May I take a tax credit on my federal income tax?

No.  This is a state of Michigan tax credit of 75% only.  You may take a federal income tax deduction.  In all cases a tax payer should check with their financial advisor as to how the contribution will effect their individual tax situation.

How much can I donate, and does it have to be in by a certain date?

Contributions must be dated no later than December 31 for a tax credit that year.  Tax credits are allocated on a first come, first serve basis until the amount of credits reaches the state’s $1 million limit. The Michigan Department of Treasury requires a Social Security number for contributions of $500 or more before distributing Tax Credit Certificates.  Place your SS# on your check/money order or contact MIDAP directly to provide this information.

May I designate that my contribution goes to a particular RCO?

No.  The RCOs have agreed to allocate the tax credits based upon the number of active accounts operating in their area in the preceding calendar year.

May I designate a particular person or family to benefit from my contribution?

No.  Tax law does not permit a gift to be made to a particular individual in order for a contributor to receive a credit or deduction.

How will I learn how my gift has been used effectively?

An annual report from MIDAP will be sent to you that details all the accounts opened in the previous years, assets purchased and select success stories. What is the demand for IDAs in the state of Michigan?

The demand far exceeds supply.  In order to be eligible for an IDA a person must be below 200% of poverty or be eligible for an Earned Income Tax Credit.    In Michigan there are more than 600,000 households below 200% of poverty.  Since 2001 MIDAP has opened approximately 2,000 IDA accounts.

Do IDAs work?

An emphatic yes!  A study of IDA account holders in Michigan and studies throughout the country show that IDAs help families save for their defined purpose and continue to save after they have completed the IDA program.  Studies also show that families that started in the IDA program but had to leave the program still continue to save on their own.   Finally, recent national reports on foreclosure among IDA participants show a foreclosure rate of less than 1%.

Contact:

Jackson County – Sheila Everts  517-784-4800, ext 280 or 800-491-0004 severts@caajlh.org
Hillsdale County – Maxine Vanlerberg 517-437-3346 or 800-750-9300 mvanlerberg@caajlh.org
Lenawee County – Julie Laughlin 517-437-3346 or 800-750-9300 jlaughlin@caajlh.org