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Education Incentive Tax Credit (EITC) Business Introduction

Education Incentive Tax Credit (EITC) Business Introduction. EITC History.

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Education Incentive Tax Credit (EITC) Business Introduction

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  1. Education Incentive Tax Credit (EITC) Business Introduction

  2. EITC History • Created in 2001 to reward businesses with up to a 100% tax credit when they contribute to a children’s scholarship organization. The scholarship organization in turns gives money to children in order to attend private schools. • In 2010, Pennsylvania businesses contributed $44 million and received $40 million in return as tax credits enabling 45,000 children to attend private schools. Each year these numbers continue to increase.

  3. Applicable Businesses and Taxes • All businesses in Pennsylvania are able to participate except nonprofits and sole proprietors • Taxes that qualify include: • 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 • S Corporation & L.L.C. Personal Income Tax (pass through entities)

  4. Types of Education Tax Credits Pre-K EITC (Pre-Kindergarten) • 100% tax credit for first $10,000 then 90% thereafter up to $150,000 for a one year • Actual tax credit is more than 100% when factoring in Federal Tax savings! EITC (Grades K through 12th) • 75% tax credit for a one year Or • 90% tax credit each year for a two years (actual tax credit around 95% for S-corps when including Federal Savings). OSTC (Grades K through 12th & located in a failing school district) • 75% tax credit for a one year Or • 90% tax credit each year for a two years (actual tax credit around 95% for S-corps when including Federal Savings). • Approximately $30 million still available for this tax year

  5. Education Incentive Tax Credit (EITC) Process Flowchart A business is contacted with EITC information and decides to partner with families of The Samuel School. They fill out the 1 page application sending it to The Samuel School to be hand delivered to the DCED (Department of Community and Economic Development) on July 1st. The DCED sends a letter to the business verifying their available credit. A business now has 60 days to contribute funds to The Samuel School and secure the tax credit. The business has then has 30 days to send a copy of the receipt to the DCED who in turns sends it to the Department of Revenue who then applies the tax credit to the contributing business. DCED will also send a receipt to the business. The Samuel School then disperses the EITC contribution to qualifying families in the form of educational scholarships. The Samuel School will send a receipt to the contributing business.

  6. Follow Up Question Contacts James L. O'Donnell | Director PA Department of Community & Economic Development Tax Credit Division Commonwealth Keystone Building 400 North Street, 4th Floor | Harrisburg, PA 17120-0225 Phone: 717.720.1420 www.newPA.com | www.visitPA.com Robert A. Peck | Headmaster & Founder The Samuel School 411 South 40th Street Harrisburg, PA 17111 Phone: 717.557-1119 email: rpeck@samuelschool.com www.SamuelSchool.com

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