Do you want to help fund scholarships for LCS families with financial needs?
Of course you do!
Do you want to receive a tax credit on your Illinois tax returns?
Of course you do!
Is there a way to combine these two things?
Of course there is!
The state of Illinois passed the Invest in Kids Act in 2017. Individuals and businesses who contribute to a Scholarship Granting Organization (SGO) receive a 75% IL state tax credit. A Scholarship Granting Organization is a non-profit that receives qualified contributions from individuals and businesses. The SGO then distributes those funds in the form of scholarships to eligible students (based on financial need) who wish to attend a private school in Illinois. Individuals who donate can designate that their contributions benefit students at a specific school, such as Lansing Christian, but cannot designate a specific student at that school.
Although there are several Scholarship Granting Organizations, there are two Christian organizations that Lansing Christian partners most closely with.
The tax credit is used for Illinois state income tax purposes. An income tax deduction for charitable contributions can be utilized only at the federal level as Illinois does not allow itemized deductions.
Additionally, unless you are itemizing all deductions and not taking the standard deduction, you will not see as much of a benefit. For example, even if you itemize, the most you can save on your federal income taxes is 37% of your donation, and that is if you are in the top income tax bracket. So if you make a $1,000 donation, your tax burden is decreased by $370. In contrast, with the Illinois tax credit, if you make a $1,000 donation to a SGO, your tax liability is decreased by $750 for the year in which you make the donation. (Please note that this is not meant to be tax guidance. Please consult a tax professional for advice.)
For the first time, you will need to create an account on the My Tax Illinois website (mytax.illinois.gov) and apply for a tax credit letter ID.
- The state will mail you a letter with a tax id code. This letter comes via the US Postal Service and takes 7 to 10 days to receive.
- Use this code to set up an account with a username and passcode.
Using your Username and Passcode, log into your account and reserve a credit for the IL Invest in Kids Act.
You should receive an online notification from the Illinois Department of Revenue.
- This notification will come to you within the online system and should arrive in a matter of minutes.
- The notification should include Certificate of Credit. Save a copy of this document to your computer.
You have 60 days to make your contribution to the SGO.
- Go to the website for the Children’s Tuition Fund or the Bright Promise Fund, and click on the button to make a contribution.
- Their website will walk you through the contribution process.
- Choose Region 1 – Cook County.
- Please designate Lansing Christian School to benefit from your contribution (if you are a business, you cannot designate a school—your contribution goes to the general tax-credit scholarship fund for that organization).
- Submit a payment, either online with a debit or credit card, or by mailing a check to the SGO.
Reap the benefits of your tax credit.
- A tax credit is an amount of money that can be offset against a tax liability. Tax credits lower your tax bill. They are not deductions, but actual credits. They give you control over how your tax dollars are spent, allowing you to help provide a Christian education for students with financial needs.
What is the benefit of a tax credit over a tax deduction?
The tax credit is valid for Illinois state taxes. The tax deduction can be made at only the federal level as Illinois does not allow for itemized deductions.
Additionally, unless you are itemizing all deductions and not taking the standard deductions, you will not see as much of a benefit. For example, even if you itemize, the most you can save on your federal taxes is 37% of your donation, and that is if you are in the top tax bracket. So if you make a $1,000 donation, your tax burden is decreased by $370. In contrast to the IL tax credit, if you make a $1,000 donation, your tax liability is decreased by $750. In the same vein, if your Illinois income tax liability is $10,000, you can make that donation of that amount to a SGO, and then your Illinois tax liability is $2,500.00. (Please note that this is not meant to be tax guidance. Please consult a tax professional for advice.)
As a potential donor, you have to ask yourself: Where would you like your money to go? You can either pay your state income tax liability to the Illinois Department of Revenue, or you can direct your funds to a Christian School (via the SGO) and receive a 75% tax credit.