Tax Credits for Individuals
Step #1: Determine that your estimated Personal State Income Tax Liability will be $500 or more for the current Tax year.
Step #2:Choose a Special Purpose Entity (SPE) that supports a Pre-K Scholarship Program such as Diamond Street Early Childhood Center (DSECC). SPEs each have minimum levels of tax liability required for participation. DSECC has a relationship with the PennGift Foundation which requires a minimum level of only $500 for you to participate. Following are the steps for using an SPE of the PennGift Foundation.
Step #3: Confirm your intention to participate by completing a Request to Participate in SPE form by August 30, 2023 and returning to Bethany@diamondstreet.org or by mailing to: Bethany Crane Jacke, Executive Director, DSECC, 1311A Diamond Street, Akron, PA 17501.
To maximize the tax credit benefit, consider a commitment to make a contribution so that 90% of its value is an amount as close as possible to, but not exceeding, your Pennyslvania tax burden
The earlier your Commitment Form is received, the more likely you will be approved for participation in the limited, available tax credits.
Step #4: You are informed approximately mid-October by PennGift Foundation (or by DSECC) that you are approved to participate.
Step #5: Within 30 days of notice of Foundation approval, you must send a check and a 2023 Joinder Agreement (form to be provided to you) to DSECC.
About the Joinder Agreement: As an "accredited investor", you confirm status as a qualified investor, designate the amount of initial capital contribution, and designate the school to be benefited. Please list Diamond Street Early Childhood Center as the beneficiary.
You will receive a tax credit for 90% of this amount.
DSECC sends checks and joinder agreements collectively from donors to the PennGift Foundation.
Step #6: The PennGift Foundation confirms receipt of your payment and provides you with a K-1 Statement (your receipt of contribution for tax purposes).
PennGift foundation can provide you with step-by-step instructions and be available to answer any questions you may have for self-filing your taxes. Otherwise, your tax accountant will know how to file for this credit.
Step #7: The SPE distributes the contributed funds to Diamond Street Early Childhood Center as soon as the DSECC requests them. These funds will be used to provide need-based financial aid to Pre-K students at DSECC.
Who May Participate
The main risk is that you overestimate your tax liability. In such a case, the excess contribution would not receive a tax benefit on your PA return.
If the tax credit turns out to not be available for some reason, the SPE will refund your investment.
The main benefit - in addition to the joy of knowing you are supporting children, of financially eligible families, in getting an excellent early education - is that you could receive a very significant tax reduction on both your federal and state returns.
So long as the program continues, investors should be able to continue receiving this tax credit for as long as they want to continue in the SPE. Each SPE that we recommend gives priority to investors from the previous year.
Risks and Rewards
Requirements vary by the individual SPE. Diamond Street Early Childhood Center has a primary relationship with Penngift Foundation. The minimum requirements for participation are:
A PA tax liability of at least $500
Individuals who work for, own, or hold shares of a for-profit company based in PA.
For an individual taxpayer or married filing jointly taxpayers who work for nonprofits, a simple additional step of purchasing a PA stock (such as a public utility, like an electric company) is required to qualify, easy to do and usually inexpensive. Or the individual/couple might already own stock via a mutual fund, retirement investment program, etc.
Note: DSECC does not offer professional tax, legal, or accounting advice. This material is for informational and educational purposes only. For specific advice, please consult a qualified professional advisor.