Educational Improvement Tax Credit (EITC)
How Can YOU or Your Company Help OMPH School with “Free” Money!
It sounds too good to be true, but it is true! You may qualify for a tax credit that can benefit Catholic education.
In short, in May of 2001, by an overwhelming bi-partisan majority, Pennsylvania’s legislature made history by becoming the first state to pass an education tax credit aimed at PA corporations. In essence, the Educational Improvement Tax Credit (EITC) allows qualifying corporations (and individuals through Special Purpose Entities) in Pennsylvania to redirect their Pennsylvania tax dollars to qualifying educational institutions, including OMPH School. Eligible businesses and individuals may take a tax credit of up to 90% of the amount they contribute to the scholarship fund.
The Diocese of Harrisburg established the Neumann Scholarship Foundation to receive funds contributed under the EITC. The Neumann Scholarship Foundation provides tuition assistance to schools in the Diocese and, when designated, directly to Our Mother of Perpetual Help Catholic School.
If YOU or YOUR BUSINESS pays one or more of these taxes
- Pennsylvania Income Tax
- Capital Stock/Foreign Franchise Tax
- Corporate Net Income Tax
- Bank Shares Tax
- Title Insurance & Trust Company Shares Tax
- Insurance Premiums Tax
- Mutual Thrift Tax
- Malt Beverage Tax
- Retaliatory Fees Under Section 212 of the Insurance Law of 1921
You are an Individual or Couple (married filing jointly) that work in Pennsylvania and earn a minimum of $115,000 in state taxable income and owe at least $3,500 in state income taxes
You are a retiree who owns a small business (receive annual K-I form) or works for a business (receive annual W-2 form) and possesses a net worth of at least $1,000,000
You qualify to participate in the EITC Program!
How Does It Work for a business?
Tax Credits may be applied against the tax liability of a participant for the tax year in which the contribution was made. Tax credits equal to 75% of its contribution up to a maximum of $750,000 per taxable year; can be increased to 90% of the contribution, if business agrees to provide the same amount for two consecutive tax years.
In certain circumstances, the net effect of the EITC tax credit is a dollar for dollar reduction in PA tax obligations – this makes the contribution to OMPH School a “costless” program for the participant!!
Applying is as Easy as 1-2-3
How Does a Business Apply?
- Submit online EITC application at dced.pa.gov/eitc. Please note the Application Type as SO (Scholarship Organization).
- Once approved, business receives DCED acceptance letter.
- Business has 60 days to submit check to Neumann Scholarship Foundation at the Diocese of Harrisburg (memo line – “Designated to Our Mother of Perpetual Help School”). Business has additional 30 days to submit copy of Receipt of Contribution to DCED.
For the complete business guidelines, please click here.
Pennsylvania businesses must file their applications electronically for EITC credits through the Department of Community and Economic Development’s (DCED) single online application system.
For additional information, please review the PA DCED’s EITC Program Overview.
But Hurry! Applications are processed on a first-come, first-served basis by day submitted on July 1st. All applications received on a specific day will be processed on a random basis before moving on to the next day’s applications. Applications will be approved until the amount of available tax credits is exhausted.
How Does an Individual Apply?
- Submit a Joinder Agreement to become an accredited member of a Special Purpose Entity (SPE), indicating the amount of the capital contribution and designating a school. Currently, the Diocese of Harrisburg works with The Central Pennsylvania Scholarship Fund (pennsylvaniaeitc.org) which is free and issues 100% of your funds to the school of your choice (OMPH School). There is no deadline to submit a Joinder Agreement.
- Once approved, the individual has 60 days from the award letter date to make payment. The SPE will then claim the tax credits for you.
- The tax credits are passed through to you on an individual federal and Pennsylvania K-1 tax form each February to go with your individual PA 40 tax form and claim your Pennsylvania Tax refund. The federal K-1 form lists your federal donation deduction for your individual tax return.
Need more information on EITC?
Talk to your accountant about this win-win program!
Visit on the web at www.paschoolchoice.org.
Call OMPH School Development Office at 717-738-2414 ext. 3.