Introducing the new SchoolCredits Program

Transcription

1 Introducing the new SchoolCredits Program Using Pennsylvania s Educational Investment Tax Credits (EITC) to help fund your school

2 SUMMARY It s exciting: Help fund our school using PA state tax dollars It s new: This is the first time that all taxpaying parents can direct taxes toward HTCS instead of to Harrisburg. Limited time only It helps you: This money funds financial aid to qualified families. It also helps everyone by holding down tuition and fees. The more money parents send to HTCS, instead of to taxes, the less we need to raise in tuition/fees You re receiving the benefit from other people who have been using this method for years It s simple: Sign up, make the donation and put it on your tax return Let s do this All families are requested to participate to help fund the school - Sign up now using the form attached Send forms and questions to Joe Adams at Jadams@BGuilfoyle.org and Jeff Wilson from Central PA Scholarship Fund at JeffWilsonSales@gmail.com 2

3 SIMPLE PROCESS 1. Fill out commitment form o When: Now to reserve credits 2. Review and sign official agreement o When: Later Will be sent to you 3. Make donation to school o When: Later You will be notified as credits are awarded by the state 4. Receive K-1 credit statement for 90% of donation to include on PA state tax return o o When: Early next year, around the same time as other tax forms (like employer W-2 s and Bank 1099 s) Net cost to donor is 10% (or less) of donation Note: There may be additional Federal tax benefits to taxpayers who deduct charitable contributions 3

4 SCHOOLCREDITS COMMITMENT FORM I agree to participate in the Educational Investment Tax Credit Program offered by the State of Pennsylvania I understand that in order to receive the EITC tax credits I must review and sign the final Operating Agreement and make my donation as directed within the time frame prescribed by the State of Pennsylvania. I understand that I will be provided the Operating Agreement to review and notified when to make my donation. This agreement will be in effect for 2 years which is required to receive a credit for 90% of my donation. I wish to reserve $ in state tax credits They will go to: HTCS $ ; BG $ Name(s) Address Telephone cell home work (s) Other contact(s) Signature Date Return form to: J. Adams at JAdams@BGuilfoyle.org or to BGCHS 2400 Pleasant Valley Blvd Altoona, PA

5 CURRENT SITUATION ILLUSTRATION: HOUSEHOLD EARNING $65,000/YEAR Family Now Pays both Holy Trinity tuition and state taxes. (amounts for illustration only) $3,000* $2,000* Holy Trinity Catholic School Tuition: $6,000 (cost of education) Parent Payment: $3,000* State of PA $2,000 * Illustration only. BGCHS does not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction. 5

6 SchoolCredits Program ILLUSTRATION: HOUSEHOLD EARNING $65,000/YEAR Family signs up, donates $2,000 to HTCS, and pays $200 to State of PA (10%) $3,000 $2,000 $200 Holy Trinity Catholic School Tuition: $6,000 (cost of education) Parent total: $5000 HTCS receives $2,000 more State of PA $200 Family pays $200 more (or less) BGCHS does not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction. 6

7 EDUCATIONAL INVESTMENT TAX CREDIT (EITC) PROGRAM 3.07% of personal income goes to State of PA for taxes - Paid via payroll deduction or estimated tax payments Taxable Income State tax at 3.07% $ 50,000 $ 1,535 $ 75,000 $ 2,302 $ 100,000 $ 3,070 Instead: Get a credit for 90% of donation; 10% goes to Harrisburg 7

8 Illustration Only Taxable Income: Compensation Interest income Dividend and Capital Gain Net income from business etc. Total PA taxable income 8

9 2,000 Illustration Only 1,800 1, BGCHS does not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction. 9

10 Illustration Only EITC credits 1,800 BGCHS does not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction. 10

11 EITC PROGRAM State of PA legislation in 2001 Expanded over time Our schools have received EITC donations for many years Now covers many types of taxes including personal income tax Special Purpose Entity (SPE) created solely to apply for credits and distribute to participants - BG donors participating through SPE for 2 years - Originally focused on higher income taxpayers - Now expanding opportunity to participate Credits limited, and valuable Included in State of PA budget 11

12 FREQUENTLY ASKED QUESTIONS BGCHS does not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction. 12

13 FREQUENTLY ASKED QUESTIONS Where will this money go? How will it be used? - 100% of these funds will go toward scholarships to help families pay for their education. All money must, by law, go to families with incomes below mandated limits. It will go to fund financial aid awards that are already made by the school, but are unfunded. How does this help me? - These funds will help hold down the tuition and fees for all families. The more we can fund the difference between full cost of education and parents payment, the more the school can keep costs low for everyone. Later, once we determine how much we will raise, we can consider reducing other burdensome increases or fees. Is it possible for tuition or fees be reduced if we raise enough money? - It is theoretically possible, if sufficient funds are directed to the school What if not all families participate? Is that fair? - While we request that parents all volunteer to participate, each tax situation is different and not all families may be able to participate. If a significant portion of parents participate, this will help hold down tuition for all. We will reach out to all families to help make it simple and compelling to participate. Is this a charitable contribution that could be used as a deduction for Federal tax purposes? - Yes. You would be making a contribution to a qualified charity. HTCS (and the Central PA Special Purpose Entity as a pass through entity) is a qualified charity for Federal tax purposes. Please consult your tax advisor for your individual circumstance 13

14 FREQUENTLY ASKED QUESTIONS Is this legal? - Yes, the EITC program has been used since 2001, and has recently been expanded by the state of PA. Information is on the PA state government website at Are you sure that I will be able to use the credits after I make my donation? - Yes, you will not make your donation until after the State confirms that the credits have been awarded to you What if I do not have the cash to make the donation during the required time period? - Contact the school, and we will try to work it out with you Can you explain where I would include the credits on my PA state tax return? - Please see the pages showing the PA state tax form highlighting where these credits are entered 14

15 FREQUENTLY ASKED QUESTIONS Why aren t other schools doing this? - Many schools have been receiving EITC scholarships for many years. This newly expanded opportunity is just now being recognized. BG and Holy Trinity Catholic School wish to move quickly to sign up donors. Both can use this same process to sign up. Credits are limited and we want to reserve as many as we can for our school. Who is the Central Pennsylvania Special Purpose Entity? - It is an entity that has been formed specifically to apply for EITC credits and pass them through to eligible donors and schools. See the participation agreement for more details. It is managed by a local accountant who has specialized in PA state tax credits. Why is this happening now? What has changed? - The EITC program was first established for corporations and has expanded over time. The state of PA has increased the amount of credits in the state budget, and approved Special Purpose Entities like the one we are working with. These recent changes, along with the expansion of our local Central PA Special Purpose Entity, has created this unique, limited time opportunity for us to generate a new source of funding. Can I do this later - Unfortunately, no. Timing is legally mandated and certain dates must be followed. There are specific dates credits are awarded, so applications need to be completed in advance. Furthermore, credits are limited and not always available. There is a rush to get these credits so once the state awards them, they are gone and no more can be obtained. Occasionally, though, some taxpayers cannot use their awards which does free up credits but this cannot be predicted. So, if you wait to sign up we most likely will lose out on this opportunity. 15