As the sun descends toward the horizon of 2023 (yes, that’s a daylight savings time reference), many of us are trying to balance holiday plans, year-end planning for family, work, finances, and more. Despite the myriad tasks and concerns of this time of year, we also enter a season of gratitude, fellowship, and generosity.
In the spirit of generosity, we want to highlight again a State of Ohio tax credit that benefits not only the taxpayer, but also helps provide access to private education for many Ohio families who could not otherwise afford it.
The Scholarship Donation Credit is available to Ohio taxpayers who donate to Scholarship Granting Organizations (SGOs) in 2023. The maximum credit for an individual is $750 and $1,500 for married couples. SGOs provide tuition assistance and needs-based scholarships for K-12 students attending private schools. The greatest barrier to entry in private schools is the tuition cost, but these organizations are helping reduce that burden through tuition assistance. Fortunately, the State of Ohio is incentivizing giving to these SGOs via the tax credit.
If your total tax liability exceeds $750 (single) or $1500 (married), then you are eligible to contribute up to the maximum and receive the credit. You can give more, but these are the limits for the tax credit. Up to these limits, it doesn’t end up costing you anything, you simply must wait to get the money back at tax-time.
Here are a few helpful tips to consider if give to an SGO:
- You will receive a gift letter/receipt from the SGO. When you file state taxes, consider submitting a copy of the letter with your tax return, as the state will likely ask for it. Failing to submit the letter could result in a delay.
- Starting in tax year 2023, the State of Ohio has extended the deadline to make contributions to the non-extended tax filing deadline. Simply stated, you can give up until April 15th for the prior tax year.
- These gifts are also deductible on Federal taxes for those who itemize.
As always, please consult your tax advisor as to your eligibility for this tax credit.
As a real-life example, my family and I are very involved at St. Catharine of Siena Church and School on the east side. I have three children in school and one in pre-school. They certainly aren’t asking me for financial gifts at this point, but if I can choose whether the school or the state gets my $1,500, the choice is clear. The funds are used for tuition assistance, but those funds potentially free up other dollars in the school budget for the improvement of programs, staffing, and other needs the school may have. To do this, I’ll give to the Emmaus Road Scholarship Fund at the Catholic Diocese of Columbus and direct my gift to St. Catharine. They will send me a gift letter for tax purposes, and I’ll claim the credit on my 2023 Ohio income tax return.
You may want to direct your gift to a charter school, independent school, or other non-public school, and in nearly all cases, there is a SGO that can accommodate that. The link below lists the Certified SGOs in Ohio. Even if you do not have ties to any particular school, you are able to give to the SGO that most aligns with your values, and they will dole it out to member schools at their discretion.
While Seasonal Affective Disorder is a well-known reality during the short days of an Ohio winter, there is no dearth of opportunity to be seasonally effective with our giving and to be a light to others.
Written by Nick Boyden, Client Advisor and father of six