Wednesday, June 20, 2018

The Indiana Department of Education Can Help in Charitable Planning


The concept is an interesting one, and very much in keeping with the charitable planning goals of certain of our Geyer law estate planning clients - helping both corporations and the well-to-do help their low-income neighbors.

The Indiana legislature established the School Scholarship Tax Credit Program to incentivize private donations that fund educational choice for low-income families, while the Indiana Department of Revenue and the Indiana Department of Education adopted the rules for implementing the program.

How does the program work?
Private donations fund SGO scholarships. The State of Indiana provides funds for School Choice Scholarships, which are vouchers that enable students from low-to-middle-income families to attend non-public schools in Indiana.
Donors (either individuals or corporations) can take advantage of a 50% state tax credit when they make contributions to a qualifying SGO (scholarship granting organization). Donors’ gifts also qualify as charitable contributions for federal income tax purposes.  Contributions of appreciated stock or mutual fund shares, plus qualified charitable distributions from IRAs can create even greater federal tax savings.

Parents apply for scholarships for their children who want to go to a participating non-public school of their choice. (The student must be member of a household with annual income of no more than 200% of the amount required to qualify for reduced or free federal lunch program.)

Overall cap – There is no limit on how much a donor can contribute to a qualified SGO, but the entire program has a limit of $12,500,000 for the fiscal year beginning July 1, 2017, and ending June 30, 2018 (just over a week from the publishing of this blog post).

As Indiana estate planning attorneys, we offer no tax advice, instead working together with our clients’ tax and financial planning advisors, we find that charitable giving is an important element in many of our clients’ overall estate plans.

It’s good to know: the Indiana Department of Education can be a partner in charitable and estate planning!
- by Ronnie of the Rebecca W. Geyer & Associates blog team

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