PA Tax Credit Program

The Educational Improvement Tax Credit (EITC) - Special Purpose Entity (SPE) program offers you an incomparable opportunity to make a difference in the life of a child and support the overall excellence of the education that we provide to our students here at Sewickley Academy.

An excellent education provides the foundation for a life well-lived. Sewickley Academy educates young people from 41 different school districts in our region. One in four students receives financial support from the school which affords them the opportunity to attend.

This support achieves two goals:

It ensures that we have a socio-economically diverse student body, which is important for all students.
It allows us to create the robust educational environment that is vital to ensuring the quality of educational outcomes for our students. Bottom line: an investment in financial aid supports educational excellence for all students and ensures access to qualified students who might not otherwise be able to afford to attend.

The Commonwealth of Pennsylvania, through it's Educational Improvement Tax Credit (EITC) - Special Purpose Entity (SPE) program, provides eligible taxpayers an opportunity to support qualified educational institutions by designating Pennsylvania State tax dollars towards those schools’ financial aid programs. In return, eligible investors can receive a 90% state tax credit on the amount of their donation. The materials available for download in the right column explain the benefits of participation and how easy it can be to support Sewickley Academy by directing your Pennsylvania State tax dollars to the school’s financial aid program.

We are pleased to be able to offer this opportunity to you, one that is free from the hassles that plagued the old EITC application process. Please review the materials and reach out if you have any questions. We look forward to working with you on behalf of the students here at Sewickley Academy, all of whom benefit from our investment in financial aid.

Questions or interested in participating? Contact Brittani Spencer at bspencer@sewickley.org.

List of 12 frequently asked questions.

Can these credits be used on both individual and joint income tax returns?

Yes, you qualify if your individual or combined PA tax liability is $3,500 or more.
When Sewickley Academy receives my contribution, what is it used for?

Your contribution is strictly used for Sewickley Academy’s financial aid program, distributed to families who submit an application through the Academy’s financial aid process and who qualify for assistance based on need. The EITC tax credits were created by the legislature for the purpose of providing tuition assistance in the form of scholarships for eligible students.
What is a Special Purpose Entity (SPE) as it pertains to Pennsylvania education tax credits?

A Special Purpose Entity is a new class of pass-through partnerships that exists solely for the purpose of obtaining Education Improvement Tax Credits or Opportunity Scholarship Tax Credits (EITC/OSTC).
If I participate in these tax credits, how much will it cost me?

You will need to make either a minimum donation of $3,500 or larger if you choose, up to the amount of your annual state taxes. When you file your taxes in the spring you will receive a refund of 90% of your donation from Pennsylvania and a federal benefit based on your ability to deduct 10% of your donation as a charitable contribution. If the donation is made through your corporation, you may be eligible to deduct 100% of your donation as a charitable contribution. Please consult with your tax advisor.
What Special Purpose Entity has Sewickley Academy chosen to associate with?

The Academy is associated with the Central Pennsylvania Scholarship Fund, a Pennsylvania-approved scholarship organization and their collection of special purpose entities.
Who can receive education credits through the SPE?

The Central Pennsylvania Scholarship Fund, at present, offers membership to individuals/couples and certain for-profit business firms with a minimum PA tax liability of $3,500 annually.
Do I need to earn a particular income to qualify?

This is based on tax liability, not income, therefore each taxpayer’s situation will differ. An individual or couple filing jointly must have a state tax liability of $3,500 or more to participate. To see if you may qualify for 2020, you can find your PA tax liability on Form PA-40 Line 12 of your most recent tax return.
Can I participate if I am retired?

If you are retired, you must own a small business (receive an annual K-1 form) or work for a business (receive an annual W-2 form) to qualify as a member of an SPE and receive EITC/OSTC tax credits. Some retirees qualify due to side jobs or residual ownership of businesses, and some do not.
Why must I commit to two years? Can I increase or decrease my tax credit donation amount the second year?

The Central Pennsylvania Scholarship Fund requires a two-year commitment of at least $3,500 per year in order for its members to receive a 90% tax credit. (The state awards a 75% tax credit when you commit for only one year, or a 90% tax credit when you commit to two consecutive years). If unexpected circumstances occur that dictate your second-year donation must be reduced from your original commitment, such as loss of job or reduction in tax liability, please contact the SPE. You may increase your donation in the second year up to the amount of your PA tax liability.
What's the difference between and tax credit and tax deduction?
Tax credits and tax deductions may be the most satisfying part of preparing your tax return. Both reduce your tax bill, but in very different ways.
- Tax credits directly reduce the amount of tax you owe, giving you a dollar-for-dollar reduction of your tax liability. A tax credit valued at $1,000, for instance, lowers your tax bill by the corresponding $1,000.
- Tax deductions, on the other hand, reduce how much of your income is subject to taxes. Deductions lower your taxable income by the percentage of your highest federal income tax bracket. So if you fall into the 22% tax bracket, a $1,000 deduction saves you $220.
Source: Nerdwallet
Do I have to be employed by a for-profit business? What if I work for a business but my spouse works for a non-profit?

One member of the family must be employed by or own a for-profit business. If one works for a business and the other a non-profit, and you file joint returns, both qualify for the purposes of determining tax liability.
What does this mean for Sewickley Academy families and supporters?

Academy families and benefactors may be able to designate part of their Pennsylvania state tax liability for use by Sewickley Academy to enhance financial aid for qualifying families.