What is a Tax Credit Scholarship Program?
A Tax Credit Scholarship Program allows taxpayers – individuals, corporations, partnerships or trusts – to donate to Scholarship Granting Organizations (SGO) and receive a credit on their state taxes in return. Montini Catholic High School will utilize the SGO entitled Empower Illinois.
Empower Illinois will then use the donations to grant scholarships to qualifying students to attend a qualifying nonpublic school. However, we are asking donors to designate Montini Catholic when submitting your application to the State of Illinois. This insures that your tax credit donation will provide financial assistance to a Montini Catholic student.
You will need a "My Tax" account in order to start the application process. Once an application has been submitted and the tax credit is approved, then you can submit your donation/tax credit to Empower Illinois.
Any donating taxpayer will receive a 75% credit. This means that if a donor donates $10,000, they will receive a state tax credit of $7,500.
- Donations by a single taxpayer are capped at $1 million.
- Individuals can direct their donations to a school or subset of schools of their choice but not to particular students. It is important for you to designate your donation to Montini Catholic High School and designate Region II which is the region in which Montini resides.
- Corporations cannot designate their donations to a specific schools or students but Corporations can designate their donations to a specific region. Montini Catholic is in Region II.
- The credit is non-refundable (meaning it cannot take a taxpayers liability below zero), but it can be carried forward for five years.
Can a donor receive a federal tax deduction in addition to a state tax credit for the same donation?
No. The legislation specifically prohibits this.
What is the benefit of this program if I cannot take a federal tax deduction?
While you will not be able to claim a federal tax deduction, a donor will be able to realize a reduced tax liability. We recommend that you consult your tax attorney or tax consultant.
Is there program cap? If so, what is it?
Yes, there is a cap. It is $75 million per year.
- The cap sets the amount of tax credits that can be handed out; it does not cap the amount of scholarships that can be distributed under the program.
- In order for the $75 million cap to be hit, $100 million will have to be donated.
How does that donation process work?
Beginning in January of each year, an individual and corporate donors will be able to apply for tax credits on a Department of Revenue website. The Department will issue rules to define the application process. Applications will need to set up an account at mytax.illinois.gov in order to apply to participate in this program. Again, it is important that individual donors select Montini Catholic as their designee and corporations select Region II, of which Montini Catholic is a member, as their designee.
- If approved, the donor will be given a contribution authorization certificate.
- The Department shall issue contribution authorization certificates on a first-come, first-served basis based upon the date of the taxpayer's application for the certificate.
- The donor will then have 60 days to donate the amount they reserved to Empower Illinois or the SGO of their choice.
- After donating, the donor will receive, within 30 days, a certificate of receipt from the SGO, indicating that a donation was made.
- Within 10 days of issuing a certificate of receipt, the SGO will then notify the Department of Revenue that the donation was made.
If a donor doesn’t donate, rescinds their donation, or gives less than they indicated to the Department of Revenue, they will not receive ANY tax credit. All unused tax credits will be put back into the program until the cap is hit.
SCHOLARSHIP GRANTING ORGANIZATION
What is an SGO?
An SGO is a 501c3 non-profit organization whose primary aim is to give scholarships to students. If you choose to participate in this program, we ask that choose Empower Illinois for your Illinois Tax Credit Scholarship Donation. Montini Catholic, as well as all Catholic schools in the Diocese of Joliet will be utilizing the SGO, Empower Illinois.
A taxpayer may take a credit under this Act for tax years beginning on or after January 1, 2018 and ending before January 1, 2023. A taxpayer may not take a credit pursuant to this Act for tax years beginning on or after January 1, 2023.
This Act is repealed on January 1, 2024.