EITC
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Understanding EITC in Pennsylvania: A Powerful Donation ToolThe Educational Improvement Tax Credit (EITC) program in Pennsylvania offers businesses a unique opportunity to support education while receiving significant tax benefits. Here’s how it works:
What is EITC?
The EITC program allows businesses to donate to approved educational organizations and receive tax credits in return. This program is designed to encourage private investment in education, helping to fund scholarships and innovative programs for students across the state.How Does It Work?
- Application: Businesses apply to the Pennsylvania Department of Community and Economic Development (DCED) to participate in the EITC program. Applications are accepted on a first-come, first-served basis starting July 1st each year.
- Donation: Once approved, businesses can choose to donate to one or more of the following:
- Scholarship Organizations: These provide scholarships to eligible students to attend private or public schools of their choice.
- Educational Improvement Organizations: These organizations fund innovative educational programs that enhance the public school curriculum.
- Pre-K Scholarship Organizations: These offer scholarships for pre-kindergarten education.
- Tax Credits:Businesses can receive tax credits equal to a percentage of their donation:
- 75% Credit: For a one-year commitment.
- 90% Credit: For a two-year commitment.
- Eligibility:The tax credits can be applied against the following Pennsylvania taxes:
- Corporate Net Income Tax
- Capital Stock Franchise Tax
- Bank and Trust Company Shares Tax
- Insurance Premiums Tax
- Mutual Thrift Institutions Tax
- Personal Income Tax (for individuals or owners of pass-through entities such as S-corporations, partnerships, or LLCs).
Benefits of EITC
- Support Education: Contributions directly benefit students and schools, enhancing educational opportunities and resources.
- Tax Savings: Businesses enjoy substantial tax savings, effectively reducing their state tax liability while contributing to a worthy cause.
- Community Impact: By participating in the EITC program, businesses help to improve educational outcomes and strengthen their local communities.
How to Get Started
Businesses interested in participating in the EITC program should:- Apply Early: Submit applications as soon as the application period opens on July 1st to increase the chances of approval.
- Select Organizations: Choose from a list of approved scholarship and educational improvement organizations.
- Donate and Claim Credits: Make the donation and claim the corresponding tax credits on the business’s state tax return.
For more detailed information, visit the Pennsylvania DCED EITC page or consult with a tax professional to explore how your business can benefit from this program while supporting education in Pennsylvania.If approved, what do I need to do?
Your business must make its donation within 60 days of the notification letter. Within 90 days of the notification letter from DCED your business must also provide proof to DCED that the contribution was made. Wait for written approval from the state DCED.When notified of approval by the state, your company then writes a check in the amount of the tax credit. The check is made out to Scholastic Opportunity Scholarship (SOS).Lastly, in a cover letter accompanying the check, you will designate that you specifically want "Saints Peter and Paul Catholic School" as the recipient of the tax credit. The check and letter is then sent to the Diocese of Pittsburgh.Saints Peter & Paul is approved as a scholarship organization and is able to receive EITC contributions from Pennsylvania businesses.
Applications for the Educational Improvement Tax Credit Program should be submitted as early as possible the morning of July 1st. Unfortunately, EITC funding has been reduced in recent years and all credits are likely to be exhausted on this first day that applications are being accepted. We cannot stress enough the importance of faxing this EITC application to (717) 772-3581 first thing on July 1stPlease feel free to contact us if you would like to participate or have any questions about this valuable program.
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