Recently, Illinois enacted the “Invest in Kids Act,” which provides for a tax credit equal to 75% of qualifying contributions made to a Scholarship Granting Organization (“SGO”), up to a maximum $1 million per taxpayer. The credit is not available to taxpayers who claim a federal income tax deduction for the contribution.
SGOs are approved nonprofit organizations that receive and distribute qualified contributions from individuals and businesses to be issued to qualified non-public schools as scholarships.
The credit is available to individuals, corporations, S-corporations, partnerships, LLCs, and trusts. Individuals may direct their contribution to a particular subset of schools or a particular school. However, they may not take a credit for contributions directed to a particular group of students or a particular student. Contributions made by non-individuals may not direct their contribution to any particular subset of schools, school, group of individuals, or individual.
Taxpayers must apply online to the Illinois Department of Revenue before making their intended contribution in order to obtain a “Contribution Authorization Certificate.” Once approved, the taxpayers must make their contribution within 60 days to the SGO, to be eligible to claim the 75% credit. Applicants may begin making their online submission on January 2, 2018.
The credit is scheduled to expire December 31, 2022. Any unused credits can be carried forward five years and may not be carried back to prior tax years.
The credit provides a great opportunity for taxpayers to reduce their Illinois taxable income beginning in 2018. Contact us today to learn more about the credit, eligibility and record keeping requirements, and how it can help you.