Ohio Tax Credit Program for CMA's SGO

Questions


Q: What is a tax deduction?

A: A tax deduction is an amount you subtract from your income when you file so you don't pay tax on it. By lowering your income, deductions lower your tax.


Q: What is a tax credit?

A: A tax credit is an amount you can subtract directly from your tax. This is different from a tax deduction, which lowers the amount of your taxable income.

  • A tax credit is an amount of money that taxpayers can subtract, dollar for dollar, from the income taxes they owe.
  • Tax credits are more favorable than tax deductions because they reduce the tax due, not just the amount of taxable income.
  • There are three basic types of tax credits: nonrefundable, refundable, and partially refundable.
  • Nonrefundable tax credits can reduce the tax you owe to zero, but they don’t provide refunds.

 

Q: What is a Scholarship Granting Organization?

A: A Scholarship Granting Organization (SGO) is a non-profit organization that receives donations from individuals and businesses, and then awards scholarships to students:
Purpose: SGOs are primarily focused on awarding academic scholarships to students in K-12, with a priority on low-income students.
Tax benefits: Donors to certified Ohio SGOs can receive a tax credit through the Ohio Tax Credit Program. The credit is available to most taxpayers who take the standard deduction on their federal tax return.


Q: May I designate my SGO contribution to a specific student?
A: No. Following the rules of the OAIS SGO, as a 501(c)3 organization, CMA cannot earmark or accept donations for a specific student. 


Q: How do I receive the tax credit from the State of Ohio?
A: The credit is claimed on your State of Ohio income tax return when you file it.


Q: My spouse and I would like to make a $1,500 contribution to the SGO. Can we write one check or make one online contribution and receive the $1,500 non-refundable Ohio income tax credit?
A: Under the direction of the State of Ohio, married taxpayers must make TWO SEPARATE $750 donations (one in each of their names) to be eligible for the full $1,500 non-refundable Ohio income tax credit.


Q: Can businesses in Ohio donate to an SGO?
A: It depends. Businesses in Ohio, specifically pass-through entities like partnerships, LLCs, and S-corporations, can donate to a certified Ohio Scholarship Granting Organization (SGO) to receive a nonrefundable tax credit. Corporations generally cannot participate; only pass-through entities and individuals are eligible.


Q: Is there a cap or limit to the SGO and tax credit?
A: There is no cap to donations to SGOs across the state. Any amount may be donated to the SGO, however, only $750 per individual or entity ($1,500 if married filing jointly) may be claimed as a tax credit on your Ohio income tax return.

NOTE: the Ohio SGO credit is nonrefundable. If your total tax liability exceeds $750 (single) or $1,500 (married), then you are eligible to contribute up to the maximum and receive the credit. If, however, your tax liability is less than $750 (single) or $1,500 (married), then the tax credit is limited to the amount on line 8C of your Ohio IT 1040. Also, note that credits are applied to your tax liability in the order they appear on the Ohio Schedule of Credits.