PA Educational Tax Credits

Have you heard of Pa's Educational Improvement Tax Credits?

 

What are PA Educational Tax Credits?

These are tax credits that allow you to redirect your PA state income tax liability to scholarships that benefit qualifying children. If you choose to participate in the program and direct your credits to Conestoga Christian School (CCS) those dollars will help fund the tuition assistance offered to many CCS families. 

 

Who can participate?

  • Pass-through entities, such as S-Corporations, Partnerships, LLCs, LLPs, C-Corporations

  • Qualifying individuals

  • Sole proprietorships are not eligible to participate in the programs

 

In the past, only certain business entity types could take advantage of this opportunity. Recently the Pa Legislature passed a bill that allows qualifying individuals to participate in the program through what is known as a Special Purpose Entity (SPE). 

 

     Eligibility for joining an SPE:

  • Legal entities and individuals (including spouses) who are owners or employees of a for profit LLC, partnership, or corporation.

  • Individuals who own stock in any public company registered to pay tax in PA.

  • Most SPEs are asking members for a 2 year commitment.

  • Minimum contribution depends on the SPE. For example ACSIs minimum annual contribution is $1,000, Faith Builders minimum annual contribution is $3,000.

  • Information on two specific SPE’s CCS benefits from:

Who benefits?

Christian families longing to provide a Christian education for their children but need financial help to do so benefit from this program.

How does this benefit me?

  • Increase your charitable contributions at minimal cost to you.

    • If you make a 1 year commitment you will receive a 75% PA state tax credit.

    • If you make a 2 year commitment you will receive a 90% PA state tax credit.

  • Direct your state tax dollars to an organization you believe in, such as CCS.

  • Use your resources to further God's kingdom.

 

Example: James is in the 37% tax bracket and does itemized deductions. James agrees to contribute $3,000 via the Faith Builders SPE to his children’s school, which participates in the EITC Tax Credit program. He agrees to a two year commitment and receives a 90% PA Tax Credit and receives a $111 federal tax benefit contribution credit. With the EITC credits, James’ net out-of-pocket will be $189.

How do I apply for the credit?

  • There are two ways:

Option 1: Complete a PA Department of Community and Economic Development (DCED) application: A business that is an S-Corporation, Partnership, LLC, LLP, or C-Corporation can apply directly for the credits by completing and submitting an application to the PA Department of Community and Economic Development (DCED). 

Typically the application process opens July 1 for new participants, and repeat businesses that have previously made a 1 year commitment. As awarding of credits is limited and available on a first-come basis it is key to submit your application on the day the process opens.

Click to access the PA Dept of Community & Economic Development.

Option 2: Join a Special Purpose Entity: Qualifying individuals apply for the credit through a Special Purpose Entity (SPE). Qualifying businesses can also choose to apply for the credit through an SPE. As the application date for participation in SPEs varies you should check with your SPE of choice for their specific application criteria. 

Individuals you may contact for more information:

  • Conestoga Christian School Business Office:

  • ACSI Children's Tuition Fund

    • Catherine Long: (717) 285-3022; email: Catherine_long@acsi.org; Catherine will answer questions concerning business applications to the DCED, and provide details on participating in an ACSI Special Purpose Entity

  • Faith Builders Scholarship Services

    • Vivian Mast: (814) 789-4518, ext. 225; email: secretary@fbscholarship.org; Vivian will answer questions concerning DCED business applications and assist you with filing the application

    • Lucy Miller: (814) 789-4518, ext. 245; email: SPE@fbep.org; Lucy will  answer questions concerning participation in a Faith Builders Special Purpose Entity.

For detailed information please take a look at our PA Educational Tax Credits Guide.

Thank you for your prayerful consideration of supporting CCS in this way,

A Testimonial...

 

When I began to understand the Pennsylvania EITC and OSTC programs, I couldn’t help but be reminded of the parable of the talents. In Matthew 25:14-30, when given the opportunity to multiply money for the kingdom, the master was pleased most by the faithful service of the servant who doubled the money entrusted to him. I view these programs as similar opportunities.

 

I had the accounting firm that our company utilizes run some scenarios for me based on past contributions. I was surprised when I found out that in the best-case scenario, my net cost of an EITC or OSTC contribution was only 6.7%! As an example, if I was to give $100 to the program, my cost would be $6.70 to do this. The best-case scenario assumes that the pass-through income is there to take advantage of all of the available tax credit. In the worst-case scenario my net cost of an EITC or OSTC contribution would be 45.3%. This still gives me the opportunity to more than double my money as a contribution to the program. The worst-case scenario assumes that the pass-through income is limited and therefore most of the tax credit    is unavailable.

 

The PA state tax doesn’t go away, but the EITC and OSTC programs allow us to directly put our taxes to work for the Kingdom of God. We see value in these programs and hope to be able to utilize them for many years.

 

Best regards,

Anonymous Donor