EITC Tax Credit Donations Expand Program Participation
What is the Pennsylvania EITC Program?
The Educational Improvement Tax Credit program allows business donors and accredited individual donors to redirect their annual business and individual income tax liabilities to local schools and charities that help kids from ages 3 to 18.
What tax benefit does a donor receive?
The donor receives a 90% Pennsylvania state tax credit offer in return for a two year commitment to donate to a specific list of local registered charities. The donor also receives a federal tax deduction with a benefit of 0% to 28% depending on the donor’s tax situation. For example, a taxpayer paying AMT federal tax (the alternative minimum tax) can receive a 28% Federal benefit creating a situation where the donation lowers the donor’s total taxes by 118%. The donor is effectively redirecting their state taxes to local charities of their choice. The donation tax credit is limited to the donor’s state tax incurred annually.
What charities participate in the program?
Pennsylvania DCED publishes a list of charities who have registered to receive Pennsylvania tax credits. The list is updated annually. Here is a link to the list of charities:
Most every Pennsylvania private school can receive donations directly or indirectly for scholarships in addition to this list of charities.
How can you get involved?
The first step is to request a PA EITC tax credit from the program. Volunteers are available at each participating charity to help with this simple, no obligation request. The PA EITC program receives more requests than it can honor annually so there may be a delay in receiving a tax credit award. Once you receive a tax credit award you can make your donation to a local charity.
What are the new opportunities for donors?
A new program allows individual donors to buy into a partnership where a tax credit has already been requested. The partnerships purpose is to help individual accredited investors obtain PA EITC tax credit related donation benefits and pick their local school and charity to benefit. The donors are limited to individual accredited investors who work for a business. Opportunities for 2018 are now available and space is limited. Donors are included on a first come basis, so it is important to get your application in early.
Contact any of the local participating charities for further information about a Special Purpose Entity (SPE) for individual donors. For information about SPE donor opportunities contact our volunteer charity at the link below:
Want to know more about the PA EITC SPE rules?
Your personal tax accountant or financial advisor can assist with your involvement with this program. Every participating charity has volunteers that can answer your questions. You can also contact me and I will certainly try to help match you with the best opportunity for your situation. For more information on the Pennsylvania state program, please visit the following Web site: