Ohio Scholarship Donation Credit | Qualified SGO | OH IN KY

Ohio Scholarship Donation Credit Could Earn Taxpayers $1,500

Published on by Nick Scerbo, Dave Phelps, in Not-for-Profit, Tax Services

Ohio Scholarship Donation Credit Could Earn Taxpayers $1,500

Reducing your income taxes while benefiting a charitable organization at the same time usually provides a welcome opportunity for many taxpayers. The State of Ohio introduced the Ohio Scholarship Donation Credit in 2021, and it continues to be in effect for 2022 for individuals paying Ohio taxes this year. The credit is available for those making financial donations to an eligible Scholarship-Granting Organization (SGO).

The credit is up to $750 (individual) or $1,500 (married filing jointly).  If you file a married joint return, each taxpayer will need to make their own $750 contribution to claim the maximum tax credit of $1,500. The credit is also limited to the total Ohio State income tax due for the 2022 tax year.  If a married couple owes at least $1,500 of Ohio state tax they can make qualifying contributions at no net cost to them.  The donor sends money to the SGO and receives a tax credit from the state of Ohio which lowers the donor’s tax due by $1500, in this example.

If a donation was made to a qualified SGO by December 31, 2022, the taxpayer can claim 100% of the donation on their 2022 tax return subject to the limits listed above.

The taxpayer may also be eligible to receive a federal tax deduction for this contribution since it is considered a qualifying charitable contribution. This means that there could be both a state and a federal tax benefit for a charitable contribution depending upon certain taxpayers’ situations.

Gifts must be made to a qualified SGO.  According to the Ohio Attorney General’s Office, the criteria for being a qualified SGO is as follows:

  1. Be a religious or nonreligious nonprofit organization exempt from federal taxation under section 501(a) of the Internal Revenue Code as an organization described in section 501(c)(3) of the Internal Revenue Code.
  2. Primarily award academic scholarships for students to attend primary and secondary schools (K-12).
  3. Prioritize awarding scholarships to low-income primary and secondary school students.
  4. Comply with all registration and reporting requirements with the Ohio Attorney General applicable under the Ohio Charitable Trust Act, Ohio Revised Code (ORC) ORC 109.23-109.32, and/or the Ohio Charitable Organizations Act, ORC Chapter 1716.

A list of SGO organizations can be found here.

No credit can be earned to donations to a non-qualified SGO.

If you have questions, please contact your Barnes Dennig tax advisor. As always, we’re here to help.


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