EITC and OSTC
An easy and impactful program enabling individuals and businesses to turn their PA state tax dollars into need-based scholarships for Gwynedd girls
The Pennsylvania Educational Improvement Tax Credit (EITC) and Opportunity Scholarship Tax Credit (OSTC) Programs give individuals and business the opportunity to redirect their state tax dollars to Gwynedd Mercy Academy High School in support of need-based scholarships for qualifying students.
In short, the program enables you to: 1) make a substantial need-based scholarship donation at little cost to you, 2) esnure a Gwynedd education is possible for all accepted students regardless of a family's financial circumstances, and 3) enrich our School community.
Available to businesses since 2001 and to individual/married jointly filing taxpayers since 2014, the programs enable participants to receive a 90% tax credit against their PA state tax liability for a two-year commitment or a 75% tax credit for a one-year commitment.
Businesses can apply on their own with the state. Businesses who wish to apply must do so by May 17. New business applicants must apply by July 1. A business can apply for tax credits equal to 75% of its contribution up to a maximum of $750,000 per taxable year. Credits can be increased to 90% if the business agrees to provide the same amount for two consecutive tax years. Click here to learn more.
Individuals/married couples and businesses also can easily participate by joining a special purpose limited liability company (LLC) formed by one of Gwynedd's EITC partners, Business Leaders Organized by Catholic Schools (BLOCS) or the Foundation for Catholic Education (FCE). Here is how it works:
- To join, you make a two- or one-year commitment to help fund an LLC, and sign a basic agreement. A two-year commitment gives you a 90% credit each year and a one-year commitment gives you a 75% credit; the remaining 10% to 25% may be claimed as a charitable donation on your federal tax return. BLOCS requires an annual contribution of $5,000 or more. This means your PA tax liability, as an individual or jointly with a spouse, must be $5,000 or above (line 12 of your PA-40 tax form). FCE requires an annual contribution of $1,000 or more.
- Your first contribution is typically due at signing, and your second contribution is typically due on or before July 1 of the following year.
- The LLC receives tax credits equal to 90%/75% of your donation amount; and, in February or March, BLOCS/FCE distributes your credits on a Schedule K-1 form to apply toward your PA tax liability. There also may be additional benefits to your Federal Tax liability as they relate to Alternative Minimum Tax (AMT); please consult your tax advisor to maximize your overall potential tax savings.
- Gwynedd receives a check for 90% or more of your scholarship donation, and all funds are used to provide tuition assistance for qualifying students in the upcoming academic year. The remaining 10% supports the mission of BLOCS or FCE in providing children’s access to high quality, values-based education in Catholic schools with the greatest need.
- The same procedure is followed for the second year of a two-year commitment.
Impact Example: A couple makes their first contribution of $5,000 to fund a BLOCS Scholarship LLC. In turn, they receive a PA Tax Credit in the amount of $4,500 (90% of state taxes owed); have the ability to claim $500 (the remaining 10% of their contribution) as a charitable donation on their federal tax return—a $185 benefit based on a 37% tax rate; and provide Gwynedd with up to $5,000 in need-based scholarship funds for an out-of-pocket cost of $315.
How do you apply? It is a SIMPLE process that involves a brief conversation and SIMPLE application from BLOCS/FCE.
"An hour information session and 15 minutes to complete a form - that's all if took for me to make an impact that will last a lifetime." Kathleen Kirk Bellwoar '81, Chair, Board of Trustees