Businesses can earn valuable tax breaks through their support of private primary and secondary education.
Exactly how they can go about doing so was discussed by Robert L. Buck, CPA, of Buckno Lisicky & Company, as part of a recent joint luncheon between the Palmerton Area and Greater Northern Lehigh Chamber of Commerce.
Buck explained the Educational Improvement Tax Credit and Opportunity Scholarship Tax Credit, and how to compute and apply for them.
Buck said the Educational Tax Credit is for businesses that make contributions to the Eastern Pennsylvania Scholarship Foundation.
It allows businesses to obtain tax credits while supporting private education; it’s a low cost (or even no cost) way to make sizable donations; and it keeps state tax dollars in your community, he said.
“This means that if your business pays certain state income taxes, your donation could end up costing you nothing,” Buck said.
Buck said the EITC was established in 2001 via Act 4, which amends the Public School Code. It allows for tax credits to companies who make donations to state-approved scholarship foundations and educational improvement organizations. It was amended in 2003 to allow for a Pre-Kindergarten Tax Credit Program. Hence, the Opportunity Tax Credit Program was established in June 2012.
In essence, the dollars your business would pay to the state in taxes will instead be diverted to provide tuition assistance in the form of scholarships to eligible students residing within the boundaries
of a low-achieving school to attend another public school outside of their district or nonpublic school.., in satisfaction of your Pennsylvania tax liability, he said.
If your business pays one or more of the Corporate Net Income Tax, Capital Stock Franchise Tax, Bank and Trust Company Shares Tax, Title Insurance Companies Shares Tax, Insurance Premiums Tax, Mutual Thrift Institutions Tax, and All Sub-Chapter S Corporations and other “pass through” entities (LLC, LLP, and other partnerships) that pay personal income tax on PA business income are eligible to fully participate in the EITC program, he said.
Buck said the maximum contribution of $750,000 per tax year allows businesses to receive up to a 90-percent tax credit for a two-year commitment, and up to a 75-percent tax credit for a one-year commitment. The contribution can also be deducted from your Federal taxes, he said.
One-hundred percent of all EITC contributions go directly to the schools designated by the business donor. No administrative costs are deducted.
To apply, visit www.newPA.com and complete the single online application. For step-by-step directions on how to complete the online application, go to www.allentowndiocese.org/giving, and scroll down to Eastern Pennsylvania Scholarship Foundation.