Education Tax Credit Application for Individuals and Businesses
In 2012, the Virginia General Assembly established the Education Improvement Scholarship Tax Credit program that provides state tax credits for persons or businesses making monetary donations to approved scholarship foundations like RJF. The program provides scholarships to eligible students for qualified educational expenses incurred in attending eligible nonpublic schools.
How it works:
- The donation ($500 minimum) must be in the form of cash, check, credit card, or other monetary gift, but not goods, services, marketable securities, or property.
- The tax credit is equal to 65 percent of the monetary donation, and may be claimed against the individual income tax, corporate income tax, bank franchise tax, insurance premiums license tax, or tax on public service corporations.
- Individuals and married persons may not be issued more than $50,000 in tax credits in a taxable year; however, this $50,000 limitation does not apply to credits issued to any business entity, including a sole proprietorship.
- Any unused tax credits may be carried over for the next five succeeding taxable years or until the total amount of credit has been taken, whichever is sooner.
How to Donate:
- Individuals and businesses must first request preauthorization for a specified tax credit amount. If you are an individual or business and would like to request preauthorization for a specified tax credit amount please click here to apply:Preauthorization
- The preauthorization notice issued to the donor by the Department of Education must accompany the monetary donation from the donor to the scholarship foundation.
- The scholarship foundation must, within 20 days, return the notice to the Department of Education certifying the donor, the amount of the monetary donation, and the date it was received from the donor.
- Preauthorization notices not acted upon by the donor within 180 days of issuance will become void.
Other Considerations:
The credit will be allowed to be claimed for the taxable year following the year of the monetary donation. For those taxpayers making estimated tax payments, the credit would be prorated equally against estimated tax payments made in the third and fourth quarters of the taxable year in which the credit may be claimed, and the final tax payment. When claiming the tax credit for the appropriate taxable year, an individual or business must submit with the applicable tax return verification from each scholarship foundation to which monetary donations have been made and the tax credit certification document issued by the Department of Education.
Tax credits will be awarded on a first come, first serve basis.
Donors may designate or limit their donations, and RJF may designate or limit their scholarship awards, to a particular group of eligible schools where scholarships may be used by eligible students, as long as the eligible student’s parent or legal guardian selects the eligible school where the scholarship will be used among those in the designated or limited group.
The tax credit laws allow recommendations, but they are not guaranteed because RJF cannot award, restrict, or reserve scholarships solely on the basis of a donor’s recommendation. A taxpayer may not claim a tax credit if the taxpayer agrees to swap donations with another taxpayer to benefit either taxpayer’s own dependent (a.k.a.: swapping recommendations with another parent for each other’s children is prohibited). A taxpayer may also not recommend his/her own child or dependent.
