What is the “Educational Improvement Tax Credit Program?”
The EITC program is unique to Pennsylvania allowing businesses to make a charitable donation based on the amount of PA state taxes they pay. In return, they receive a 75 percent tax credit when filing state taxes. For example, a $10,000 donation earns a $7,500 tax credit, plus it can be claimed as a donation on the federal tax return. A two-year $10,000 donation earns a 90 percent tax credit or $9,000 per year. Any business that pays Pennsylvania taxes is qualified to participate.
Why should businesses participate?
Businesses can reduce their tax liability while they support organizations like GSWPA that enhance the educational opportunities for kids of all ages (K-12). Participation in the EITC program provides significant leverage to the contributions made by a corporation. Tax credits are more attractive than a standard charitable donation. While deductions reduce the amount of taxable income, tax credits reduce the actual tax bill, dollar for dollar. Tax credits are utilized after tax liability is established.
EITC Frequently Asked Questions
When does the tax credit program begin and how much is available?
The program year is July 1 – June 30. In the past, a total of up to $14.5 million has been available for educational improvement organizations. Applications for tax credits are processed until the tax credits are exhausted; therefore it is important for businesses to act now. The filing date is July 1 for first year applications and May 15 for renewal (year 2) applications.
How do businesses apply for the tax credit?
The process is simple. Businesses must submit a brief application to the DCED stating what amount they plan to contribute. The DCED will notify businesses if their applications are approved. After receiving approval, businesses have 60 days to make the contribution to an approved Educational Improvement Organization. The business must also send the DCED a copy of the confirmation of contribution from the Educational Improvement Organization to which the contribution was made. Applications are available on the DCED Web site, www.newpa.com.
How are EITC funds utilized by Stage Right?
These funds enable Stage Right to continue to bring affordable, high quality, arts education and entertainment to Westmoreland County and the surrounding areas. Additionally we can continue to partner with schools and community groups across Western Pennsylvania, to offer kids the opportunity to perform live and on stage. Through the PA Educational Improvement Tax Credit Program, your business can support Stage Right’s valuable educational programs and significantly reduce its tax liability. In addition to the state tax credit received, many companies can also deduct their contribution on their federal tax return, costing them virtually nothing to strengthen and enhance the educational experience of thousands of local kids of all ages (K-12).
Did you know your company may qualify for a tax rebate through the Educational Improvement Tax Credit Program. The EITC program is a project of the Pennsylvania Department of Community and Economic Development which accepts contributions from area businesses and corporations to support innovative educational programs in public schools, as well as scholarships for children attending accredited K through 12 private schools and children attending qualified and approved Pre-Kindergarten programs.