By James Ohrn, CFO, Custom Group Industries
April 15 is a date all employers know.
July 1 is another key, tax-related date you should know.
July 1 is when you can apply for state tax credits that allow you to pay some of your taxes to an organization near and dear to your heart. No, not state government; rather, you may redirect some of your taxes to one or more nonprofit charities in your own hometown.
Here’s how. Visit the Pennsylvania Educational Improvement Tax Credit (EITC) program website, PAEITC@pa.gov, and fill out the application for tax credits. It may take an hour the first time, but it’s time well spent in terms of how your taxes will be spent.
After you apply, you’ll receive an approval. On the state website, you can then choose from among a number of charitable organizations that are eligible to receive the tax money you commit to donating. You can receive tax credits worth 100 percent of your donation up to $10,000, then 90 percent up to $200,000 if applied to Pre-Kindergarten Scholarship organizations. For other eligible nonprofits, tax credits can equal 75 percent of contributions up to $750,000 per year, or 90 percent if a two-year commitment is made.
Corporations, C-corps, S-corps, partnerships and LLCs can take advantage of this opportunity. In some situations, such as in S-corps, the owner also can save on earned income taxes as a portion of the tax credits is applied to their personal income tax liabilities. So it’s a win-win — for companies, for company owners, for hometown charities, even for the state, which is also being philanthropic in making these funds available for charitable redirection.
Custom Group Industries started participating in the PA EITC program with the goal of being as supportive as possible of the community we do business in. The company has received tax credits for six years, so we’ve redirected more than $100,000 of our taxes to benefit local charities — including schools, pre-K programs and education-related organizations, such as Success by 6, Sarah Reed Children’s Center, Prep/Villa, and Americans for the Competitive Enterprise System.
So please consider using this user-friendly program, first by applying as early as possible on July 1 — event 6 or 7 a.m., since credits are limited. I’d be happy to respond to any questions or comments about state tax credits through this blog. You can call me at 814/898-2800. Or you can call the state EITC office directly at 717/787-7120.
The bottom line, which we CFOs are charged with watching, is this: You’re going to write the check anyway, normally to Harrisburg. Why not write it instead to a nonprofit of your choice?
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