Since 2009, many more Indiana households have been able to enroll their child(ren) in a private school for grades K-12. In 2009, Indiana passed legislation to create the School Scholarship Tax Credit Program.*
Administered by state-approved Scholarship Granting Organizations (SGO), scholarships are awarded to students from income-eligible households enrolled in tuition-based schools that choose to participate.
The funds for these awards are raised through gifts from individuals and businesses who, in return, receive Indiana state income tax credits and possibly a federal income tax deduction.
Individuals or businesses in Indiana with Indiana state income tax liabilities are eligible to receive an Indiana state income tax credit equal to 50 percent of their gift amount to a SGO. Because a SGO is a 501(c)3 organization, these gifts are eligible for a federal income tax deduction as well. Donations are restricted to support scholarship awards to income-eligible students at Scecina.
In order to receive a tax credit scholarship, a student with a financial need must be enrolled at Scecina and have successfully completed the school’s financial aid application process.
*This is not the Indiana Choice Scholarship program, also known as the “voucher” program.
SSTC and Required Minimum Distribution (RMD) for IRA/401K
The Indiana Department of Revenue's current position is that direct transfers, done in concert with meeting the federal Required Minimum Distribution (RMD) rules, from an IRA/401(k) to the Institute for Quality Education (IQE) are eligible for the School Scholarship Tax Credit (SSTC). As such, when taking your RMD distribution, you may instruct your IRA/401(k) administrator to transfer funds directly to IQE, with additional instructions that these funds, minus an administrative fee, are to be given to Scecina. You are then eligible to take advantage of a 50 percent credit against your state-tax liability.
Also, any contribution to Scecina made, either directly or through the IQE, as a result of an RMD distribution is not subject to federal or state income taxation. Please contact Jim McGuinness with any questions you may have about this very beneficial program, both to Scecina Memorial High School, and to you as a donor and a taxpayer.
The clock is always ticking on the SSTC: Each year, the state limit on the amount of available tax credits for fiscal year is reached earlier. The $9.5 million available for 2016-17 ran out on Dec. 19, 2016, and the fiscal year ends June 30 each year.
The tax credits were available again on July 1, 2017. There are no guarantees the credits will be available until June 30, 2018. Because of the tremendous tax deduction advantage, many more individuals are taking advantage of this opportunity much earlier in the year (July through December).
The state of Indiana tracks the amount of scholarship tax credits that remain on a daily basis. You can find that information by clicking here.