New EITC Special Purpose Entity (SPE) Program for Individual Tax Credits
For individuals that wish to donate to scholarships at The Hillside School and receive PA Education tax credits (EITC) on their personal tax return the process of participating in a Special Purpose Entity (SPE) creates an opportunity for an EITC individual donor.
Requirements to Qualify for SPE Program for Individual Tax Credits
- Program is based on tax liability, not income; therefore, each situation will be different. An individual or couple filing jointly must earn a minimum of $115,000 in state taxable income or have a state tax liability of $3,500 or more to participate. To see if you qualify, you can find your PA tax liability on Form PA‐40 Line 12 of your most recent tax return.
- This donation is a two‐year commitment to get a 90% tax credit for PA.
- Donors must be employed by or own a for-profit business; however, if one works for a business and the other a nonprofit you can file joint returns, both qualify for the purpose of determining tax liability.
- If you are retired, you must own a small business (receive an annual K‐1 form) or work for a business (receive an annual W‐2 form) to qualify as a member of an SPE and receive EITC/OSTC tax credits. Some retirees qualify due to side jobs or residential ownership of business and some do not.
To obtain a K‐1 and Receive Individual Tax Credits
- Contact the Central Pennsylvania Scholarship Fund for a Joinder form (email@example.com) to reserve your tax credit. Your check will be requested when an EITC tax credit award letter is issued.
- Central Pennsylvania Scholarship Fund will issue you a K‐1 and forward a check to The Hillside School.
- This will redirect your Pennsylvania Individual taxes to The Hillside School.
- A PA small business typically does not pay PA taxes and so the joinder should be filled out by the individual owners. The business can make the donation from owners draw or tax accounts but the eligible SPE member is the individual that pays PA tax.
Always consult your tax accountant when making decisions that have a tax implication.