Frequently Asked Questions
Illinois Public Act 100-0465 created the Invest in Kids Act. This Act allows state income tax credits for individual and corporate taxpayers who make authorized contributions to a Scholarship Granting Organization (SGO). The SGOs, in turn, provide scholarships for eligible students to attend non-public schools in Illinois.
How does this affect The Frances Xavier Warde School and the Children at the Crossroads Foundation?
The Children at the Crossroads Foundation (CATC) has been approved as an SGO under the Act. Authorized donations to CATC are eligible for a 75% tax credit and can be directed to FXW. CATC will use such contributions to fund scholarships for FXW students.
How many credits are available?
The Department can issue up to $75 million in tax credits per calendar year; the credits are divided proportionally into 5 regions within the state (FXW is in Region 1).
What benefits does a taxpayer receive for making a qualified contribution?
Illinois taxpayers who are approved can receive state income tax credits in the amount of 75% of their total qualified contributions made to one or more SGOs during a taxable year. For example, if you made a qualified contribution of $5000 to an approved SGO such as CATC, you will be eligible to claim a $3750 state tax credit.
How does one get approved for the credit?
You must first apply to the Department of Revenue for approval to make qualifying contributions. The application process is through the MyTax Illinois portal at tax.illinois.gov
. Approval is granted automatically as long as credits are still available. You must include the name of the SGO and the region, and individual donors may direct their contribution to benefit a particular school, such as FXW.
Do I need to do anything before applying for the tax credit?
Yes. The application through MyTax Illinois requires that donors “activate” their account before applying for a credit. Most of the activation process is online, but for security purposes the Department of Revenue must mail an ID to finalize the activation, and this can take 7-10 business days. Prospective donors are strongly encouraged to set up and activate a MyTax Illinois account as soon as possible. This flowchart
can help you determine if you have an active MyTax Illinois account. If you need to establish or reactive a MyTax Illinois account, the necessary steps are outlined here
When can I apply to be approved for the tax credit?
The tax credit application process will be available to registered users through MyTax Illinois on January 2, 2018, at 8 a.m. and tax credits will be awarded on a first-come, first-served basis. In other states with similar programs, the credits are claimed very quickly, so it will be important for interested donors to act quickly.
What do I need in order to claim my credit?
Once approved, you will be issued a Contribution Authorization Certificate (CAC) by the Department of Revenue. Within 60 days, you must provide a copy of the CAC, along with the full contribution, to the SGO. The SGO will issue a Certificate of Receipt within 30 days of receiving the contribution.
What if I don’t need all of my tax credit?
Any credit amount that exceeds your tax liability for the year can be carried forward and applied in the subsequent five years. Credits cannot be carried back to a prior tax year.
Are there any limitations?
You cannot take an Illinois tax credit under this Act if you claimed this same contribution as a federal income tax deduction. Also, credits cannot exceed $1 million per taxpayer, per year.
How might this impact my other CATC contributions?
At this point, we believe that the credits will not be available for contributions made in conjunction with an event, such as the Scholarship Dinner or the CATC Golf Outing. Also, it is likely that the credits will be claimed quickly, so donors who would like to take advantage of this opportunity will probably have to initiate the process in early January.
How should I plan my contributions to CATC to take full advantage of the Invest in Kids tax credits?
Every taxpayer’s situation is slightly different, and we recommend that you discuss with your financial planner how Invest in Kids may impact your timing, strategies, and goals. Because the credits will not be available until the 2018 tax year, the tax benefits of a gift to CATC in 2017 will be the same as in previous years. Moving forward, beginning in 2018, if you wish to take advantage of the tax credit, you will likely want to plan your annual CATC donation for early in the calendar year.
Where can I get additional information?
The Invest in Kids website
provides additional information for donors, SGOs, and schools. The Department of Revenue also published an Informational Bulletin
that answers many common questions about the program. You are encouraged to set up your MyTax Illinois account
now in order to be ready to apply for a tax credit on January 2.
If you have any other questions, please email firstname.lastname@example.org or contact Sarah Frick (312-268-2567) or Chris Portman (312-268-2524).