Making a Difference: The Alabama Opportunity Scholarship Fund

11/29/16
By: Amber Beavers

\a>Do you pay Alabama income tax? Did you know that a portion of your tax liability could be donated to the Alabama Opportunity Scholarship Fund (AOSF)? Individuals and companies are able to donate up to 50% of their Alabama income tax liability to AOSF for a dollar-for-dollar state tax credit.

AOSF is an organization that helps economically disadvantaged children attend a private school or transfer to a non-failing public school. It is financed primarily through donated tax liability, which means you have an opportunity to take control of where a substantial amount of your state income tax goes.

Regardless of residency, any individual, C corporation, S Corporation, partnership and LLC can donate and use the credit as long as they have tax liability in Alabama in the year the donation is made. There are limitations on the tax credit. Companies are allowed a 100% credit up to 50% of their total income tax liability for their donation. Individuals are allowed a 100% credit up to 50% of their total income tax liability or a maximum credit of $50,000. However, if the credits exceed the taxpayer’s income tax liability they may be carried forward up to 3 years from the year of donation.

Here are the facts you need to know about making a donation:

  • You must make a cash donation to a qualifying Scholarship Granting Organization (SGO), reserve your allotment of credits using the Alabama Department of Revenue’s online portal, My Alabama Taxes (MAT), and have the donation verified by the SGO within 30 days of receipt.
  • An actual cash payment to a qualifying SGO must be made first before a taxpayer can validly reserve an allotment of credits on the MAT portal. It is recommended that the taxpayer reserve an allotment as soon as payment is made because the total amount of credits for a given calendar year is capped at $30 million and they are reserved on a first-come, first served basis.
  • A taxpayer is allowed to make a donation to a qualifying SGO on December 31, 2016. The taxpayer will have until January 10, 2017 to reserve their allotment of credits. That date also applies to the verification of the donation by the qualifying SGO.
  • Taxpayers can plan to make the payments next year using their quarterly estimated tax payments, consistent with the rules above.

The following schools in Baldwin & Escambia counties are partnered with AOSF to accept scholarship students:

  • Christ the King Catholic School, Daphne, AL
  • St. Benedict Catholic School, Elberta, AL
  • St. Michael Catholic High School, Fairhope, AL
  • St. Patrick School, Robertsdale, AL
  • Escambia Academy, Atmore, AL

This is a great way to give back to your community and it can help you take control of directing your taxes to a cause you care about. If you have any questions about this or other credits, please be sure to contact your hb&k representative who can walk you through your situation and let you know the best options for you. Our phone number is 251-928-2443. For more information about AOSF, please visit http://www.alabamascholarshipfund.org/.