Dear Friends and Clients,

The Invest in Kids Act, which allows individuals and corporations to donate to scholarship granting organizations (“SGO”) and receive a state income tax credit, was passed by the State of Illinois this past summer. Donations to SGOs will be used to grant scholarships to attend non-public schools in Illinois to qualifying students whose 2017 household federal AGI did not exceed 300% of the federal poverty level and does not exceed 400% of the federal poverty level after the scholarship is received.

If you would like to try to take advantage of the Invest in Kids Act, any donation made to a qualifying SGO will result in a 75% Illinois income tax credit for the amount donated. For example, if you donate $10,000.00, you will receive a state income tax credit (i.e. actual reduction in state income taxes owed) of $7,500.00. Donations by any single taxpayer are capped at $1 million. You may direct which school, or subset of schools, receive the benefit from any donation made to an SGO. However, a corporation may not make such a designation. This tax credit is non-refundable, but it can be carried forward 5 years. Credits cannot be carried back to a prior tax year. It is important to note that an Illinois credit cannot be taken if you claim a federal income tax deduction on the donation made to an SGO.

There is a state-wide program cap on the total tax credits that the State of Illinois will allow. That amount is $75 million per year. Therefore, the state-wide maximum that may be donated to all qualifying SGOs is $100 million per year. Further, for the purpose of awarding credits, Illinois will be divided into five (5) regions whose boundaries are the same as the Illinois Appellate Court districts. The five regions and their estimated proportionate share of the tax credits (as of November, 2017) for 2018 are:
  • Region 1: Cook County, 51.22%; 
  • Region 2: Northern Counties, 23.09%; 
  • Region 3: North Central Counties, 9.97%; 
  • Region 4: Central Counties, 7.50%; and 
  • Region 5: Southern Counties, 8.22%. 
For a listing of counties within each region, visit http://www.illinoiscourts.gov/AppellateCourt/DistrictMap.asp.

In order to make a donation, an account must be established through the Illinois Department of Revenue’s website (https://mytax.illinois.gov/). If you require guidance on how to apply to create an account, please refer to the attached “Tax Credit Scholarship Sign-Up” from the Archdiocese of Chicago. Once you apply for an account, a letter will be sent to you within 7-10 business days and will include a Letter ID. The Letter ID is required when applying for the tax credit donation. Once your account has been created (and beginning on January 2, 2018), you will be able to reserve tax credits on a first-come, first-serve basis. If you require guidance on how to reserve tax credits, please see the attached “Tax Credit Scholarship Request Letter ID” from the Archdiocese of Chicago. Once you reserve your tax credit amount, you have 60 days to donate the amount you indicated to an SGO your choosing. If you fail to make a donation or rescind your donation, you will not receive a credit. If you donate any amount less than the amount you reserved with the Department of Revenue, you will only receive a credit based on the actual amount donated.

This email is being sent for informational purposes only. No reply to this email is needed or expected unless you have questions or require assistance.