Leaving a Legacy for Future Generations
Your State Taxes to Scholarships
The State of Pennsylvania has a unique program that allows you to direct your State Tax dollars to private educational institutions to benefit families who wouldn’t be able to afford a private education.
Watch this video to learn how.
How EITC Works
EITC stands for Educational Improvement Tax Credit, and it has been helping pave the way for qualified families to have access to a Christian Education at VFBA. The EITC program enables you to receive a 90% state tax credit for monetary support directed to VFBA through EITC. The remaining 10% can be deducted from your federal taxes as a charitable deduction if you itemize. If you earn at least $18,000/year in PA and can give a minimum of $500, you can participate.
Complete the 1 page form stating the amount of state tax that you want to go towards a scholarship with “Valley Forge Baptist Academy” as the receipient.
Our EITC Specialist Terry Doyle will help you through every step of the process, ensuring your form goes where it needs to go, and answering any questions you may have.
Tax forms which show your EITC participation are prepared, completed and sent by the scholarship organization to you. All in time for April tax season.
What's the catch?
No catch, no surprises. This program was started in 2001 by Governor Tom Ridge and had bipartisan support. The program continues with strong support from both sides of the aisle. For information from the PA state Department of Community and Economic Development itself, feel free to explore the link here.
If you work in PA, pay income taxes to PA, and earn a minimum of $18,000/year, you can participate.
What about my business?
If your business operates in PA and pays income taxes* to PA, and earns at least $18,000/year, you can participate as a business! This may exempt you from filing quarterly estimated payments to the state.
*There are other taxes a business might pay that also qualify for the credit such as:
- Personal Income Tax
- Capital Stock/Foreign Franchise Tax
- Corporate Net Income Tax
- Bank Shares Tax
- Title Insurance & Trust Company Shares Tax
- Insurance Premium Tax (excluding unauthorized, domestic/foreign marine)
- Mutual Thrift Tax
- Malt Beverage Tax
- Surplus Lines Tax
How much money can I direct to VFBA?
You can direct a minimum of $500 up to a maximum of 110% of your state tax amount to VFBA through EITC, and anywhere in between, you decide. You must determine how much tax you will owe the state by the end of the current year by one of three ways:
- Determine how much you will make by 12/31 of the current year, multiply it by .0307 (the current PA state income tax rate is 3.07%)
- Check your PA state tax return from last year and estimate your tax for this year from your anticipated earnings
- Check with a tax advisor
How will this affect my taxes?
The EITC program provides a 90% dollar-for-dollar state tax credit of the amount you give to VFBA through EITC. 10% of your funds directed qualifies as a charitable deduction on your federal tax return and may reduce what you owe to the Federal Government.
For example, if you pay $1000 in PA state taxes (taken out through your paycheck automatically), and you give a separate $1000 to VFBA through EITC, you will receive a $900 PA state tax credit sent directly to you either via check or bank deposit depending on how you filed your taxes. The remaining $100 is considered a charitable deduction on your federal return if you itemize.
Your Federal and State K-1 forms will arrive by the end of February. Schedules for both your state and federal return will be completed with all the pertinent information so that you simply include them with your returns. Because tax forms can change, please contact Terry Doyle for additional up-to-date information.
Can employers stop withholding state tax from my paycheck if I join EITC?
No. EITC participants write a check each year in the fall and send it to the scholarship organization which has been qualified and approved by the state. They handle interactions between the state and the school, making sure the funds are used as scholarships for qualified students in private schools.
Since your employer already withheld the funds all year, and you participated in EITC and sent money to a scholarship organization, you will receive a 90% refund of the check you wrote, from the state of Pennsylvania. This comes typically in the summer/fall.
If you are a business and file quarterly, you will be able to eliminate the need to file your state taxes quarterly once you are in the program and you are redirecting a significant amount of what you would normally owe the state.
Who gets my redirected money?
The EITC program targets those who may not be able to afford a private school education. Families must apply and qualify to receive EITC scholarship support based on income, tax records and/or other verified circumstances.
When is the application deadline?
The sooner you submit a joinder form, the better. Priority is given to those who have participated the previous year. When participants drop out due to relocation, retirement or other factors, or when the amount of credits from the state increases, new participants are added on a first-come first-serve basis.
Can I recruit others to join EITC for VFBA?
Yes. Parents are encouraged to spread the word about EITC! Anyone who qualifies can help VFBA. Terry Doyle is available to meet or speak with those who are interested.
Wait, major businesses participate in EITC?
Yes, just to name a few: Comcast, Vanguard, Wawa, PNC Bank, Verizon, QVC, Peco, Aqua, Wells Fargo, Glenmede Trust and more. So you're in good company (See what we did there?). EITC is a well-established, common sense choice for businesses and families alike.
It takes just 15 minutes to get started with Terry, your personal specialist at every step. Contact her via email with this form.