The Joseph Group

The “Robin Hood” of Tax Credits

August 18, 2022

To Inform:

Let us propose a thought experiment. Suppose that fussy old Prince John has usurped governorship of Ohio and he’s taxing you hand over fist. You and your spouse decide that you want to stick it to that criminal curmudgeon, so you take $1,500 of your taxes owed and give it to the private school your kids or grandkids attend, for the sake of providing tuition assistance for families who otherwise could not afford it. You’ve stolen from the rich to give to the poor. Well, in the famed tale, you’d be hanged. The End.

Good news, we are not in the famed tale! You can do this legally and live to tell about it!

If you value private education, or education in general, you should know that the State of Ohio is giving taxpayers a sizeable tax credit for donating to Scholarship Granting Organizations in 2022.

Scholarship Granting Organizations 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 working to reduce that burden through tuition assistance. Fortunately, the State of Ohio is now incentivizing giving to these SGOs via the Scholarship Donation Credit. The tax credit equals the lesser of $750 or the total amount donated to SGOs during the tax year, or $1,500 for couples.

To state it plainly, if you give up to $750 as an individual, or $1,500 as a couple, to a certified SGO in 2022, you will receive that same amount, dollar-for-dollar, off your Ohio income tax bill. 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. There are no income limits to be eligible.

As always, please consult your tax advisor as to your eligibility for this tax credit.

You may be thinking, “why haven’t we heard of this before?” Well, it started in 2021 and the SGOs and their member schools are still working to get the word out.

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 the school and one in the 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 any 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 2022 Ohio income tax return.

You may want to direct your gift to a charter school, independent school, or other Christian school, and in nearly all cases, there is a SGO that can accommodate that. The link below lists the eight 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.

Certified SGOs in Ohio: Ohio Scholarship Granting Organizations

Here are a few links to the SGOs that cover most independent, Catholic, Lutheran, and other Christian schools. On each page there is a listing of member schools.

To make an impact on families who want the best education for their kids but can’t afford it, you don’t have to be on the lam or be an expert with a long bow to be like Robin Hood. Just talk to your tax advisor about the Scholarship Donation Credit.

 

 

 

 

Written by Nick Boyden, Client Advisor