Support a PA Educational Institution and Reduce Personal Income Taxes

December 5, 2017

Why do this?
An individual makes a two-year commitment and receives a PA tax credit equal to 90% of their contribution. Does that mean that you have an extra 10% cost? Not necessarily. Making a contribution to the EITC program in lieu of paying state income taxes can also reduce your federal income taxes if you are subject to the federal Alternative Minimum Tax ("AMT"). In that case, the sum of the 90% PA tax credit with the federal AMT tax reduction can exceed the contribution. Yes, that's right.

Who qualifies?
You need to be an employee, shareholder, partner or member of a business firm (this excludes nonprofits and government employees). Your individual participation is not conditional on participation of your business, although both are eligible. In addition, you need to meet one of the two following tests:

  • Your individual income exceeded $200,000 in each of the two most recent years or your joint income with your spouse exceeded $300,000 in each of those years.
  • Your individual or joint net worth (excluding your primary residence and any mortgage securing it) exceeds $1,000,000, net worth being your total assets less total liabilities.

You will not be required to provide any personal financial information. You will simply check a box indicating that you meet one of these tests.

How do I participate?
Sisterson is teaming up with a group of volunteer PA CPAs to make this a simple process. How does it work?

  • You contact Sisterson to express your interest in participating.
  • You receive a document that outlines your participation in a special purpose entity LLC whose sole purpose is to collect contributions, make donations, facilitate obtaining PA tax credits and to provide you the necessary forms to assist in completing your federal/PA income taxes. There are zero expenses. 100% of your participation gives rise to a federal charitable contribution and to a 90% PA tax credit.
  • A two-year commitment is required at $3,500 or more per year.
  • If some unusual circumstance causes you not to be able to fulfill your second year commitment, the LLC will find a substitute contributor.
  • You will receive information needed to complete your income taxes in February of the year following your contribution year – i.e. in plenty of time to file by April 15.

It's not every day that a program exists to reduce your taxes and to support the advancement of education. PA has such a program and it's a win/win.

Contact Bill Richardson at 412.594.7708 or with questions.