As we wrap up the 2022, we hope you’ve been able to spend quality time with your families and loved ones. The start of a new year can be exciting in many ways! But we also put an end to some things – one of those being year-end tax planning. For that, we have a special edition blog post that spotlights charitable giving with some potential tax benefits!
In 2021, Ohio passed a law allowing for tax credits applied to donations to a Scholarship Granting Organization (SGO). An SGO pools money for scholarships to students attending non-public Ohio schools. More information can be found, including a list of SGO’s, at Ohio’s Dept. of Taxation website here: https://tax.ohio.gov/individual/resources/scholarship-donation-credit
Many of the SGO’s prioritize students from low-income backgrounds. However, all students at participating schools are eligible to apply. And as a donor, you can specify which school you’d like to direct the funds to. And while there are several SGO’s in Ohio, some of the local schools you might recognize in the central Ohio area are part of the Ohio Christian Education Network. You can visit their website at https://ohiocen.org/sgo/ .
Not only do SGO donations help families seeking private school scholarships, but there is also a state income tax credit applied to donations up to $750 per tax year – or $1500 per couple filing jointly (based on the wording of the statute, we suggest that each spouse contributes separately).
To clarify, this is a tax credit, which actually reduces your state tax liability dollar for dollar and is better than a tax DEDUCTION. So for example, if you make over $44K in taxable income, you will owe state income tax of $878. But a $750 donation to an SGO would reduce this amount from $878 to $128. That means money you would have paid in taxes anyway, could be used to help fund private education.
Your donation could count as a Tax Deduction on your Federal Taxes, but please consult your tax professional for application to your specific situation. Note that the state tax credit is nonrefundable, so if your Ohio tax liability is $400 and you donate $750, you will not receive the remainder of the $350 as a refund.
Ultimately with the SGO program’s tax benefits, it allows for you to give more, without it costing more. And as we’re into the giving season, and also year-end tax planning, I wanted to spotlight the SGO program as a potential candidate for your charitable giving.
DISCLAIMER: this is provided for general educational purposes and should not be taken as individual investment or tax advice. Please consult your tax professional for application to your unique situation. The advisors, their families, nor the company of Dodds Wealth Advisors do not benefit from your donations and are only providing this information as a potential tax strategy and opportunity for charitable giving.