eitc faq
About EITC
What is the Educational Improvement Tax Credit (EITC)?
How much has the state designated for this program?
How do Shady Side Academy students benefit from your company's support?
How does it work?
What does this mean dollar for dollar?
Can I carry this credit forward or backward?
How can I find out whether my business is eligible?
Applying for EITC
What do I need to do to apply?
Is there a lot of paperwork?
When is the application deadline?
How important is the timing of my application?
Do I have to re-apply each year?
What happens once my business is approved?
Do in-kind donations qualify for this credit?
Can the credits be separately passed through to owners?
What are my contributions deductible against?
What is the Educational Improvement Tax Credit (EITC)?
These tax credits are awarded to eligible businesses contributing to a scholarship organization, an educational improvement organization and/or a pre-kindergarten scholarship organization.
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How much has the state designated for this program?
In 2012, Pennsylvania has allocated $100 million for this program.
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How do Shady Side Academy students benefit from your company's support?
Like most everything, the cost of independent education is rising. At the same time, Shady Side Academy strives to maintain the affordability of a Shady Side Academy education and the wonderful opportunities it brings to our students. When you designate your contribution for Shady Side, your EITC contribution is directly awarded to qualifying students in the form of financial aid to cover the cost of tuition.
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How does it work?
The Commonwealth of Pennsylvania awards your business tax credits for making a contribution to Shady Side Academy. In other words, you can get a tax credit of up to $400,000.00 on your PA corporate tax liability.
A tax credit equal to 75 percent of the total contribution may be granted to a business providing proof of a donation during one taxable year. A tax credit equal to 90 percent of the total contribution may be granted if the business provides a written commitment to contribute the same amount for two consecutive years. In many cases, claiming both a PA State tax credit and Federal tax deduction could mean that your donation would result in a nearly 100 percent tax savings for your business for the amount donated. The credit cannot exceed $400,000 per business annually, and must be applied in the taxable year the contribution is made.
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What does this mean dollar for dollar?
You get a unique opportunity to designate where your tax dollars go, you qualify for state tax credits and you can also claim a charitable contribution for your business.
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Can I carry this credit forward or backward?
Unfortunately, no. And it cannot create a current refund.
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How can I find out whether my business is eligible?
Work with your financial manager to determine whether your business is eligible. Also, visit www.newpa.com/EITC to learn more.
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What do I need to do to apply?
All you need to do is work with your finance manager or accountant to determine whether your business is eligible and file your application. A limited number of tax credits are available each year and not every business that applies is approved or eligible.
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Is there a lot of paperwork?
The application is one page. You can download the application at www.newpa.com/EITC. Under "Where to Apply," click "EITC Business Guidelines" to download a PDF file that contains program guidelines and the one-page application.
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When is the deadline for application?
The PA Department of Community Economic Development begins processing applications on July 2, 2012 this year. But remember, tax credits are awarded on a first-come, first-served basis.
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How important is the timing of my application?
Applications for businesses that are first time applicants will not be accepted before July 1. Any applications received before July 1 will be disqualified and the applicants will not be informed of the disqualification.
We urge all businesses applying for EITC to fax their applications to the Pennsylvania Department of Community Economic Development at 717-787-7120 or RA-EITC@pa.gov on July 1 or email the Shady Side Academy Development Office at rmunroe@shadysideacademy.org. Education Improvement Tax Credits are usually exhausted by the end of August.
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Do I have to re-apply each year?
Applications for businesses that are applying for a second year of tax credits should be faxed no earlier than May 15. Applications for renewal will be processed first. We urge all businesses re-applying for EITC to email their applications RA-EITC@pa.gov on May 15.
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What happens once my business is approved?
You will have 60 days to make your contribution to Shady Side Academy. We then submit proof of your contribution to you for submittal to the Department of Economic Development. Your tax credit is effective the first day of the taxable year in which the contribution was made.
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Do in-kind donations qualify for this credit?
Yes, but only in specific situations.
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Can the credits be separately passed through to owners?
No. Only corporate applications are accepted.
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What are my contributions deductible against?
Eligible contributions are deductible against:
- Corporate Net Income Tax
- Capital Stock Franchise Tax
- Bank and Trust Company Shares Tax
- Title Insurance Company Shares Tax
- Insurance Premiums Tax
- Mutual Thrift Institutions Tax
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