There’s a New Way for Your Clients to Support K-12 Education and Reduce Their Federal Taxes
The new federal tax credit scholarship program will expand K-12 educational opportunities for millions of students in all school settings: public, private, religious and charter schools, as well as homeschools and microschools across the country.
How It Works:
Your clients donate up to $1,700 to a qualified SGO
The SGO uses those funds to award scholarships to eligible students
Your clients claim the credit when they file their taxes – process forthcoming in guidance
They receive a federal tax credit of up to $1,700, available annually
Your clients donate up to $1,700 to a qualified SGO
The SGO uses those funds to award scholarships to eligible students
Your clients claim the credit when they file their taxes – process forthcoming in guidance
They receive a federal tax credit of up to $1,700, available annually
What You Need To Know
The Tax Benefit
This is a dollar-for-dollar reduction in federal income tax liability—far superior to a charitable deduction.
Eligibility Requirements for Your Clients:
Contribute in cash (not stock or other property)
Provide your clients the information on how they can unlock opportunities for K-12 students across the country through the federal tax credit scholarship program.
Federal Scholarship Tax Credit: Q&A Guide
What can scholarships be used for?
Scholarships can be used for private, public and charter schools including school tuition and fees, tutoring, curriculum, special education services, and other qualified education expenses as allowed by existing Coverdell Savings Accounts under federal law.
What is an SGO?
An SGO is an organization that is tax-exempt under I.R.C. Section 501(c)(3), but is not a private foundation. They must maintain separate accounts to prevent co-mingling of qualified contributions and other amounts, and be included on the annual certified list in the covered state(s) for that year.
What are the requirements an SGO must meet?
SGO’s must provide at least 10 scholarships to students who do not all attend the same school. Additionally, 90% of the organization’s income must be spent on scholarships for eligible students, in addition to other requirements outlined by Treasury.
Who is an eligible student?
An “eligible student” is one who is from a household earning no more than 300% of the area median gross income and is eligible to enroll in a public school, grades K-12.
Who is a disqualified person?
The statute provides that SGOs may not award scholarships to any “disqualified person,” generally regarded as donors whose aggregate contributions exceed $5,000, SGO managers, certain owners of entities that make substantial contributions to an SGO, and family members of any of the individuals listed above.
More questions?
More opportunities for students and families.
A 100% non-refundable tax credit for your clients.
