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IL Tax Credit Program

IL Tax Credit Program

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UNDERSTANDING THE “INVEST IN KIDS ACT”

Tax Credit Scholarships in Illinois

In August 2017, with bipartisan support, the House and Senate passed a comprehensive education funding bill that was signed into law by the governor. The law includes a provision for tax credit scholarships, which provide strong incentives for donors to support non-public school scholarships for low-income students in the state. Illinois students from low-income families may use these new scholarships to attend a non-public school of their choice.

Tax credit scholarships provide an Illinois state income tax credit (not a deduction, like with other charitable contributions, but a full rebate) to individuals and corporations that contribute money to a non-profit Scholarship Granting Organization (SGO). That SGO then awards scholarships to eligible students.

The Scholarship Granting Organization (“SGO”) is a state regulated 501(c)(3) non-profit organization that is responsible for: A. Receiving donations from individuals and corporations. B. Receiving and processing scholarship applications from students/families. C. Distributing scholarships to eligible students/families in accordance with the new law. 

Information for the Taxpayer/Contributor

Individuals and corporations (including LLC’s S-Corps, Trusts etc.) that donate to SGOs may receive a credit off their Illinois state taxes equal to 75 percent of the donation.

Tax credit donations are capped at $1 million per taxpayer per year. Total tax credits are capped at $75 million per year statewide, which equates to $100 million in donations and scholarships.

[For example, John Doe has a tax liability to the state of $750. By donating $1,000 to the SGO his $750 tax liability is satisfied. He now owes nothing to the state and has made $1,000 donation by donating only $250 of his own money.]

Individuals may direct donations to a particular school, but not to an individual student or group of students. Corporate donors cannot restrict their donations at all.

Beginning January 2, 2018, donors can indicate the amount they want to donate and reserve the corresponding tax credits through the Illinois Department of Revenue’s website. The Department of Revenue will grant tax credits on a first come first served basis.

The process for making a donation:

I. Sign up for a MyTax Illinois account. (2 Steps)    
    1.    Request a Letter ID (you will receive this via USPS within 10 business days) 

            - click https://mytax.illinois.gov> Individuals> Request a Letter ID.
    2.    Sign up for a MyTax Illinois account using your unique Letter ID.

II. Determine amount of contribution based on your estimated 2018 state tax liability. 

III. Apply to IL Dept of Revenue for Contribution Authorization Certificate (“CAC”) which you will use in lieu of payment.
    1.     Name the SGO (Cheder will be using SGO Empower Illinois)
    2.     Choose the Region  (e.g. "Region 1" = Cook County)
    3.     Enter donation amount.

IV. Make the contribution to the SGO.
    1.     Designate the school when making the donation.
    2.     Make the donation to the SGO. within 60 days of issuance of the CAC. (If a donor fails to make all or a portion of a donation payment to the SGO by the deadline, they shall not be entitled to a certificate of receipt for that portion of the donation not made.)

*Donations are not eligible for a Federal Tax Deduction. 

For Parents Applying for Scholarships

Families can apply for scholarships beginning January 1, 2018. The initial scholarships will apply to the 2018/19 school year, and the program will continue for at least five years.

Students (K-12) from a household with income below 300 percent of the federal poverty level are eligible to apply for scholarships.

Prior to April 1, 2018 priority will be given to:

    1.    Students from households that are below 185 percent of the federal poverty level ($45,510 for family of four).

    2.    Students who reside in a “focus district.” (A list of focus districts in Lake and Cook Counties can be found here.)  

    3.    Siblings of scholarship students.

    4.    Beginning in 2019, priority will also be given to renewals of previous year scholarship recipients.

Application Process and Scholarship Details

Students can apply for scholarships directly from the SGO beginning January 1, 2018. Scholarships will be awarded on a first-come, first-serve basis, so the quicker you apply, the better your chances are.

Scholarship amounts will vary based on the student’s household income and be limited to the lower of actual tuition and fees for the student’s school, or the statewide average expense per student among public schools (currently $12,280).

    1.    Students from households that are lower than 185 percent of the federal poverty level receive 100 percent of tuition and eligible fees.

    2.    Students from households that are 185 percent to 250 percent of the federal poverty level will receive 75 percent of tuition and eligible fees through the scholarships.

    3.    Students from households that are 250 percent to 300 percent of the federal poverty level will receive 50 percent of tuition and eligible fees through the scholarships.

SGOs will be responsible for notifying priority families of application status within ten business days of receipt, after February 1st. 

Family Size

FPL 185%

FPL 250%

FPL 300%

1

$22,311.00

$30,150

$36,180

2

$30,044.00

$40,600

$48,720

3

$37,777.00

$51,050

$61,260

4

$45,510.00

$61,500

$73,800

5

$53,243.00

$71,950

$86,340

6

$60,976.00

$82,400

$98,880

7

$68,709.00

$92,850

$111,420

8

$76,442.00

$103,300

$123,960

9

$84,175.00

$113,750

$136,500

10

$91,908.00

$124,200

$149,040

11

$99,641.00

$134,650

$161,580

12

$107,374.00

$145,100

$174,120

For more information on making a state tax deductible donation or if you have any questions regarding the donation process, please contact Rabbi Moshe Wolf at mwolf@clhds.com .

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