EITC/OSTC for Individuals
The State of Pennsylvania makes available to state income tax payers the EITC/OSTC program allowing them to direct a portion of taxes paid to support certain tax-exempt organizations, among them catholic schools. While the program is a bit complicated, the local catholic church has set up procedures to make the process very easy for individual tax payers. Foundation for Catholic Education and BLOCS (Business Leadership Organized for Catholic Schools) both serve the greater Philadelphia area and provide the structures to take advantage of the EITC/OSTC program. BLOCS requires a minimum contribution of $5000 per year, while the Foundation for Catholic Education will accept $1000. BLOCS, to ensure that the state reimbursement is at the full 90%, requires a two year commitment from participants, while the Foundation offers either a two year agreement providing 90% tax credit or a one year program which provides a 75% tax credit.
Procedurally the process works as follows. You, the donor, join a Special Purpose Entity established for the purpose by one of the organizations above and you sign a participation agreement that provides that you will contribute the same amount for the current and the following years. (The agreement largely deals with what happens if a participant fails to deliver the second contribution.) You then send a check for the contribution amount to the SPE, designating the catholic school(s) of your choice to receive the money. The SPE does its magic with the state and then sends to you in March of the following year a state K1 providing you a PA tax credit of 90% of your donation which you file with your state income tax return for the donation year. Your second equal contribution is due to the SPE early the following calendar year, and the process is repeated. The catholic church is paying the operating costs of these SPEs, so the full value of your contribution comes through to your designated school.
For more information visit:
or contact Anne Becker at email@example.com
Be sure to identify St. Margaret School as your designated school/charity!