INVEST IN KIDS ACT
Why pay taxes to Illinois, when you can get a state tax credit by making a donation to Illinois Lutheran? What is it?
This new Illinois Tax Credit Scholarship program allows individuals to donate to Scholarship Granting Organizations (SGOs) and receive a tax credit for their IL state taxes in return. An SGO is a 501(c)(3) non-profit organization, approved by the IL Department of Revenue, whose primary aim is to grant scholarships to qualifying Illinois grammar school and high school students, allowing them to attend a private school in the state of Illinois. The SGO that you should designate your donations to is Empower Illinois.
WHO QUALIFIES FOR THE SCHOLARSHIPS AT ILLINOIS LUTHERAN?
Students whose families earn up to 300% of the federal poverty level or less ($73,800 for a family of four) qualify, with the priority given to students whose family’s total income in 2016 did not exceed 185% of the federal poverty level ($45,510 for a family of four). The federal poverty level has been established as $24,600 for a family of four.
WHAT IS THE BENEFIT TO AN ILLINOIS LUTHERAN DONOR WHO LIVES IN ILLINOIS?
An individual donor will receive a 75% IL state tax credit on their donation to an SGO. For example: If the donor commits to $1,000 on January 2, 2018, they will receive a state tax credit of $750 for 2018.
- Individual donors can direct their donations to Illinois Lutheran through our designated SGO, Empower Illinois.
- The credit is non-refundable, but can be carried forward for five years (through 2022)
- Donors are prohibited from receiving a federal tax deduction for these donations
- The IL Tax Credit Scholarship Program (Invest In Kids Act) has a cap of $100 million in donations in 2018
WHAT IS THE PROCESS FOR AN ILLINOIS LUTHERAN DONOR?
STEP 1 (CRITICAL):
- Donors must have a MyTax Illinois account.
- If you don’t have an account go to https://mytax.illinois.gov/ and click “Individuals” and then on “Request a Letter ID” under Miscellaneous.
- After you follow the directions, you will be mailed a Letter ID within 7-10 business days, which will then allow you to activate your account at https://mytax.illinois.gov/ under “Login to MyTax Illinois” and clicking “Sign Up Now!”
- This tax account will be used to apply for the tax credit (See STEP 2 below).
- If you don’t have a MyTax Illinois account, then you should apply for and activate an account in the next weeks to make sure it is setup by January 2, 2018.
- VERY EARLY on January 2, 2018, taxpayers in Illinois will be able to reserve a tax credit ON THE ILLINOIS DEPARTMENT OF REVENUE WEBSITE (direct link will be posted here AS SOON AS THE INFORMATION IS FINALIZED).
- To reserve your Tax Credit through the IL Department of Revenue website, it will be necessary to list the name and code number of the SGO. The SGO for Illinois Lutheran is Empower Illinois.
- After a donor reserves their tax credit very early on January 2, they will have 60 days to donate the amount they reserved to the SGO, Empower Illinois.
- If a donor reserves a credit and then does not donate OR gives less than they indicated to the IL Department of Revenue, they will NOT receive ANY tax credit.
You must have a registered MyTax Illinois account in order to apply for the credit to benefit Illinois Lutheran. If you want to apply for the credit approval, you are encouraged to create a MyTax Illinois account as soon as possible TO AVOID ANY PROCESSING DELAYS when the application system goes live on January 2, 2018.
The tax credit application will be available through MyTax Illinois on January 2, 2018 and tax credits will be awarded on a first-come, first served basis. Approved credits may be taken, beginning with the filing of your 2018 income tax return.
WHAT DO I NEED IN ORDER TO CLAIM MY TAX CREDIT?
Once approved, taxpayers are issued a Contribution Authorization Certificate (CAC) by the IL Department of Revenue. Within 60 days, you must provide a copy of this CAC, along with your full contribution to the SGO. The SGO will then issue you a Certificate of Receipt (COR) within 30 days of receiving your contribution.
WHAT IF I DON’T NEED ALL OF MY TAX CREDIT?
Any credit amount that exceeds your tax liability for the year may be carried forward and applied to your tax liability in the subsequent five taxable years. Credits are applied to the earliest year from which there is a tax liability. Credit cannot be carried back to a prior tax year.
As this is the first time Illinois has had such a program as this, there are many unknowns as far as how many Illinois Lutheran and potential Illinois Lutheran students will apply and be awarded this tax credit scholarship. Illinois Lutheran is reviewing and updating our registration and financial assistance process to encourage as many students as possible to apply for the scholarships awarded through this program.
Based upon the experience of similar programs in 18 other states, the tax credits are claimed very quickly, in some instances, within minutes of the midnight hour. We recommend you plan to make your tax credit reservation as early as possible on January 2, 2018.