The new Illinois Tax Credit Scholarship Program allows individuals and corporations to donate to Scholarship Granting Organizations (SGOs) and receive a credit on their Illinois 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 give scholarships to qualifying students.
Who qualifies for these scholarships?
Students whose families earn 300% of the federal poverty level or less ($73,800 for a family of four) qualify, and priority is given to students who are members of a household whose previous year’s total annual income does not exceed 185% of the federal poverty level ($45,510 for a family of four).
At Cristo Rey St. Martin, the average family income of the students we serve is $38,460 and the average family size is 4.3 people. All of our students qualify for the scholarship, and most of our students are in the priority category.
As this is the first time Illinois has had a program such as this, there are many unknowns as far as how many CRSM students will apply and be awarded this Tax Credit Scholarship. CRSM is reviewing and updating our registration and financial aid policies to encourage as many students as possible to apply for the Tax Credit Scholarship Program.
What is the benefit to a donor?
An individual or corporation will receive a 75% credit on their donation to an SGO. This means that if a donor donates $10,000, they will receive a state tax credit of $7,500.
- Tax credits by both individual and corporate donors are capped at $1 million.
- Individual donors can direct their donations to Cristo Rey St. Martin through the SGO.
- Corporate donors cannot designate their donation to any particular school.
- The credit is non-refundable, but can be carried forward for five years.
- Donors are prohibited from receiving a federal tax deduction for these donations.
The Illinois Tax Credit Scholarship Program has a cap of $100 million in donations, resulting in $75 million in total tax credits issued.
As a donor, what is the process?
Beginning on January 2, 2018, individual and corporate donors will be able to reserve tax credits through the My Tax Illinois website. The Illinois Department of Revenue is advising that you set up an account on the My Tax Illinois website as soon as possible if you do not already have one; it can take up to two weeks to get the account activated, so do NOT wait to try to set up an account. Based on the experience of similar programs in other states, the tax credits are claimed very quickly, in some instances within minutes. We recommend you plan on making your tax credit reservation as early as possible on January 2, 2018.
After a donor reserves their tax credit, they will have 60 days to donate the amount they reserved to the SGO of their choice. As of this time, there are no SGOs set up in Illinois. When we receive information on state approved SGOs, we will make every effort to pass that information along. For individuals, you may request to the SGO that your contribution be directed to Cristo Rey St. Martin College Prep.
After donating, the donor will receive a certificate of receipt from the SGO indicating a donation was made. The SGO will notify the IL Department of Revenue that a donation was made.
If a donor does not donate or gives less than they indicated to the IL Department of Revenue, they will not receive ANY tax credit.
The Illinois Department of Revenue has updated their website with additional information on this program. For more details, see tax.illinois.gov.