Tax Credits (EITC, OSTC and SPE)

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Did you know The State of Pennsylvania says just about any business can send their tax liability check to MMI instead of to the Department of Revenue? This is an annual opportunity to put your business’ tax dollars to work in your community the way you would like.

Pennsylvania is one of a few states in the nation which offers the Educational Improvement Tax Credit Program (EITC) and the Opportunity Scholarship Program (OSTC)! The hardest part is convincing you how simple both programs really are.

Here’s how it works…

The business you own or work for can send up to 90% of its annual PA tax debt to MMI for scholarships and only pay the State 10%. And the best part? A portion of the gift can be claimed on the business’s federal tax return as a charitable gift too! Since 2005, MMI students have received nearly $3.8 million in scholarship support thanks to the contributions of many area companies through the Educational Improvement (EITC) and Opportunity Scholarship (OSTC) Tax Credit programs.

There’s no long and detailed application process. Your business completes a simple online application. Don’t own the company? No problem. Take the info to whoever handles such things and tell them about it! There’s no research to be done, no calls to make, no hassle to go through. It is a win-win!

Want to learn more about EITC and OSTC?

Go straight to the State’s website at www.newpa.com to take a look at the PA State Guidelines…the program is continuing to grow.

EITC and OSTC applications for 2021-22 have been processed and the majority of credits are exhausted for this year. New applications will begin to be processed on July 1, 2022 for 2022-2023 but you must apply on that day since credits are usually exhausted on day one! The time to act is now to make sure you are ready to apply on July 1!

Your support of MMI through the EITC or OSTC programs will help MMI’s efforts to make our educational experience available to the most capable students regardless of their financial circumstances.

For even more information on the EITC and OSTC programs, contact Director of Advancement Kim McNulty at 570-636-1108 or kmcnulty@mmiprep.org.

Special Purpose Entities

Did you know individuals can also designate their Pennsylvania tax dollars to support MMI scholarships through the EITC Program?

Eligible individuals, or small businesses, can receive a 90% tax credit on their PA tax liability by becoming part of a Special Purpose Entity (SPE) which helps students and their families afford MMI. Participating in this program enables donors to multiply their donation 10 times for the same out-of-pocket costs and supports MMI’s need-based tuition assistance program! It is truly a WIN/WIN program.

For example: Tom Taxpayer generally makes a $500 gift to MMI’s annual fund and in 2020 he estimates he will owe $4,500 in PA taxes. He joins a special purpose entity by making a contribution of $5,000 to the SPE. He then receives a 90% tax credit on his SPE contribution, resulting in a $4,500 tax credit.  The tax credit reduces his PA tax liability to $0. Thus, in effect, since Tom Taxpayer had to pay his $4,500 PA taxes no matter what, it has cost him $500 out of pocket to make a $5,000 donation to MMI by redirecting his PA tax liability to need-based scholarships at our school. Since his annual fund donation is generally $500 he has now magnified his annual fund gift 10x and made a $5,000 scholarship contribution.

MMI is able to take part in this special EITC program through the Central PA Scholarship Fund, established by Randy Tarpey, a CPA with offices in Tyrone, PA. The fund collects individual SPE applications on behalf of MMI, bundles them into SPEs, and submits the SPE to the PA Department of Community and Economic Development for tax credit approval. After approval and confirmation from the state, the Central PA Scholarship Fund will notify the SPE members that they have 60 days to submit their contribution in full. Checks are written to the specific SPE designated by the Central PA Scholarship Fund, and are mailed directly to the Central PA Scholarship Fund offices in Tyrone. The fund then completes necessary paperwork and forwards 100% of your donation on to MMI. In early 2021, participants will receive tax credit notices (K-1 Forms) for use when they prepare both their federal and state 2020 tax returns.

Paperwork for this program is very easy. MMI’s Advancement Office will send you a Joinder Form. It asks for the donor’s name, address and social security number, and the amount you wish to contribute, and the school which you are designating as the recipient of your scholarship donation. The form does not ask for income information or copies of tax returns. The amount you agree to contribute is due in full within 60 days of receiving confirmation/approval from the Central PA Scholarship Fund.

The information presented here is intended as a general overview of Pennsylvania’s EITC, OSTC, and SPE programs, and is not to be considered tax advice. Situations vary, and we urge donors to consult with their accountant or tax professional. Please call or e-mail Kim McNulty, MMI Director of Advancement, at (570) 636-1108 or kmcnulty@mmiprep.org if you have any questions or would like more information.