Tax Efficient Way for Businesses to Support Deserving Students

The Educational Improvement Tax Credit (EITC) enables business owners to support over 1,200 Pennsylvania educational and not for profit organizations while receiving generous tax credits. 

KEY TAKEAWAYS

• Tax credits may be applied against a contributing business’s tax liability for the tax year in which the contribution is made.
• Tax credits range from 75 to 90 percent of the amount of the contribution.
• More than 51,000 Pennsylvania students benefited from EITC scholarships in the past year alone.

“There are other steps we can take to help families make ends meet, and few are more effective at reducing inequality and helping families pull themselves up through hard work than the Earned Income Tax Credit. “ — President Obama, State of the Union Address, January 28, 2014

As many of you know, charitable giving and tax mitigation are two of the five key pillars of comprehensive wealth management. However, you may not be aware that here in Pennsylvania, the Educational Improvement Tax Credit (EITC) provides business owners with an opportunity to support over 1,200 educational and not for profit organizations financially while receiving a generous tax credit. Even better, you have until July 1st, not April 15th, to take advantage of this tax-advantaged giving program.

Over the past year alone, more than 51,000 students across Pennsylvania benefited from EITC scholarships, and countless numbers of public school children benefited from innovative programs that would have likely have gone unfunded without initiatives such as EITC.

According to the Pennsylvania Department of Community & Economic Development (DCED) the EITC is available to pass-through entities such as S-Corporations, Partnerships, LLCs and C-Corporations. Tax credits may be applied against the tax liability of a business for the tax year in which the contribution is made. A business firm may receive a tax credit equal to 75 percent of its contribution to a Scholarship Organization and/or to an Educational Improvement Organization that is included on the current list published by the DCED–up to a maximum of $750,000 per taxable year. The tax credit may be increased to 90 percent of the contribution made–up to a maximum of $750,000 per taxable year–if the business firm agrees to provide the same amount of contribution to an organization for two consecutive years.

If you’re a business owner in the Keystone state, you can apply for EITC credits through DCED’s electronic single application system at www.newPA.com. The business application guide explains the process. Tax credit applications will be processed on a first-come, first-served basis in order of submission date. Applications will be approved until the amount of available tax credits is exhausted.

Consider supporting Pennsylvania students through Educational Improvement Tax Credit (EITC) program. Remember the deadline to apply is July 1st.

This communication is intended to provide general information only and should not be construed as an offer of specifically tailored individualized advice. Independence Advisers is not licensed to provide and does not provide legal or accounting advice to its clients. Advice of qualified counsel or accountant should be sought to address any specific situation.

While Independence Advisors believes the outside data sources cited to be credible, it has not independently verified the correctness of any of their inputs or calculations and, therefore, does not warranty the accuracy of any third-party sources or information.

dianelauer

Diane Lauer, MBA is the Director of Fund Development at the YWCA Tri-County Area, Pottstown, PA.  Ms. Lauer provided account and project management services to institutional non-profit organizations while working at SEI Investments and SEI Private Trust Company for 15 years. She also was Executive Director of a local non-profit.  She recently joined the YWCA Tri-County Area whose mission is dedicated to eliminating racism, empowering women and promoting peace, justice, freedom and dignity for all.  She can be contacted at dlauer@ywcatricountyarea.org

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