Tax Credit Program (EITC)
Corporations can support the Harrisburg Public Schools Foundation through Pennsylvania’s Education Improvement Tax Credit Program (EITC). Pennsylvania allows corporations to receive up to a 90% tax deduction for a two year commitment and 75% for a one year commitment when they donate to the educational improvement organizations, like the foundation. The state Department of Community and Economic Development’s Tax Credit Division oversees the EITC Program.
How does it work?
When DCED approves a business application for EITC status, the business has 60 days to issue a check to the approved EITC entity for the amount of the tax credited. The receiving nonprofit acknowledges in writing receipt of the check with the check number and date received; that letter is sent to the business which then sends a copy to DCED to validate the contribution.
Why Should Businesses Participate?
Businesses can significantly reduce their liability for Pennsylvania taxes while they support organizations, like the Harrisburg Public Schools Foundation, which enhance educational opportunities for children. Additionally, by participating in the EITC program, an organization accrues the public relations benefit that occurs when a company supports a worthy cause in the area where it does business.
How much of a tax credit can I get for my business?
Businesses can receive tax credits equal to 75 percent of its contribution up to a maximum of $750,000 per taxable year. To receive a 90 percent deduction, business must make a two-year commitment at the same donation level. Companies can effectively get a dollar-for-dollar credit for an EITC donation because if a company has not maximized their percentage of charitable donations, they can also deduct their contribution on their federal tax returns.
A contribution of any amount is welcome and may be a source of great pride for the business owner and employees. Each gift, no matter the size, helps a student to receive the education he or she needs to reach personal potential and take a fulfilling, rewarding place to society.
How do businesses apply for tax credit?
Pennsylvania businesses can begin applying for EITC credits through DCED's electronic single application system. The business application guide explains the process of applying. Tax credit applications will be processed on a first-come, first-served basis by day submitted. All applications received on a specific day will be processed on a random basis before moving on to the next day's applications. Applications will be approved until the amount of available tax credits is exhausted.
What are the deadlines to apply?
• May 15 – Business applicants who have fulfilled their 2-year commitment and wish to reapply in FY 13/14 to renew their 2-year commitment.
• May 15 – Businesses who are in the middle of their 2-year commitment.
• July 1 – All other businesses including Pre-K business applications.
Pass-through entities, such as S-Corporations, Partnerships, LLs, etc., can now apply the same day as C-Corporations. Applications must be submitted electronically using DCED’s Single Application for Assistance. Paper business applications will no longer be accepted.
How do I know if my business is eligible for EITC?
Your business is eligible to apply for EITC if you are subject to one or more of the following taxes:
• Corporate Net Income Tax
• Capital Stock Franchise Tax
• Bank and Trust Company Shares Tax
• Title Insurance Companies Shares Tax
• Insurance Premiums Tax
• Mutual Thrift Institution Tax
• Insurance Company Law of 1921
• Personal Income Tax of S corporation shareholders or Partnership partners
When do I have to make my contribution?
Once you are an approved EITC contributor, you must make your contribution within 60 days. The Harrisburg Public Schools Foundation will provide a letter confirming your contribution, which you will send to DCED. You have 60 days from the time that you have been approved as an EITC contributor to send this letter to DCED. Tax credits not used in the tax year the contribution was made may be carried forward by the Foundation with a commitment to spend the contribution in the following year.
What this mean for the students of the Harrisburg School District?
EITC funding helps support programs that enrich the lives of students within the district. Currently, the following programs have been approved by DCED: