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 $38,277 and the average family size is 4.4 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 (Region 2) through the SGO.
- Corporate donors cannot designate their donation to any particular school, but they will have to designate a region, and CRSM resides in Region 2.
- 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?
- If you do not have a My Tax Illinois account, you must request a “Letter ID” from the Illinois Department of Revenue, via the My Tax Illinois website, which will be sent via US Mail within 7 to 10 business days. Click here for instructions on requesting a Letter ID.
- Once you receive your “Letter ID,” you will be able to create an account. Here is a helpful video on how to create your account:
- Beginning on January 2, 2018 at 8:00am (CST), individual and corporate donors will be able to reserve tax credits through the My Tax Illinois website. You will find the link in the “I want to…” section when you log into your account, and you should click on the “Contribute to Invest in Kids” hyperlink to make your reservation. You will need to specify the following:
- Social Security Number
- Personal (or company) name and contact information
- Name of SGO to which he/she plans to donate (Note: There are several approved SGOs at this time, we recommend Empower Illinois or Big Shoulders Fund)
- Amount he/she plans to donate
- Region to which he/she plans to donate (Cristo Rey St. Martin is in Region 2)
You will receive your Contribution Authorization Certificate via your My Tax Illinois account within 3 days. You then have 60 days to donate the amount you reserved to the SGO of your choice. For individuals, you may request to the SGO that your contribution be directed specifically 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.
Please contact Kristen Watson, Director of Development for Cristo Rey St. Martin, with any other questions at 224-219-9712 or firstname.lastname@example.org.