Frequently Asked Questions
ABOUT THE PROGRAM
What is “Scholarships for Kids?”
Scholarships for Kids is a nonprofit 501(c)(3) organization that serves as a state-approved “Scholarship Granting Organization” (SGO) under the Alabama Accountability Act of 2013. Under Section 9 of the Act, individuals and corporations may make donations to SGOs like us, who in turn use the amounts donated to fund scholarship programs for nonpublic schools throughout the state of Alabama.
Where can I learn more about the Alabama Accountability Act and this program?
We encourage you to consult the text of section 9 of the Alabama Accountability Act and the related regulations of the Alabama Department of Revenue. These can be found online at http://revenue.alabama.gov/accountability.
Who may contribute to an SGO?
Any person or business entity may donate to an SGO, but only individuals and certain types of corporations may qualify for a tax credit, as discussed below.
Can I contribute to an SGO for a tax credit if I don’t reside in the state of Alabama?
Yes. As long as you pay Alabama state income taxes, you can contribute to an SGO for a tax credit, even if you do not physically reside in the state of Alabama.
Who qualifies for the Alabama tax credit?
The Alabama tax credit is available to individuals and to corporations that are taxed under Subchapter C of the Internal Revenue Code (“C corporations”). Tax credits may be taken for donations made by business entities with flow-through taxation, such as partnerships, limited liability companies, or Subchapter S corporations.
What is the amount of the Alabama tax credit?
Eligible donors who contribute to an SGO will receive a one-for-one tax credit against their Alabama income taxes for up to 50% of their total Alabama income tax liability, subject to a $50,000 cap on the credit for individuals (or married couples filing jointly). Eligible corporations have no similar cap. For example, an individual donor or married couple with an Alabama income tax liability of $20,000 may claim a credit of any amount up to $10,000. An eligible corporation may claim a credit of up to 50% of its liability without limitation. Oversubscription of the tax credit may be carried forward by the taxpayer up to three years.
Does my contribution qualify for a federal tax deduction in addition to an Alabama tax credit?
Yes. Regardless of whether a donation is eligible for an Alabama income tax credit, taxpayers who itemize their federal income tax deductions may count their donation to an SGO as a tax-deductible contribution for federal income tax purposes in that same way that they would for a contribution to any 501(c)(3) organization. A donation that qualifies for an Alabama income tax credit may qualify for a federal tax deduction as well.
Can I designate one of your partner schools that I want my contribution to support?
Under current Alabama law, a scholarship granting organization cannot award, restrict, or reserve scholarships on the basis of a donor's restriction or condition. Similarly, a taxpayer may not claim a tax credit for a contribution that is restricted or conditioned by the donor, including a restriction or condition requiring that the donor's contribution mst be directed to a particular student or to a particular school.
What happens if I cannot use the full amount of my Alabama income tax credit for this year’s taxes?
Any tax credit you receive as a result of your donation to an SGO may be carried forward for up to three years and applied against future years’ income tax liability.
Are there any limitations on my ability to receive a tax credit?
The Act limits the amount of credits that may be awarded by all SGOs throughout Alabama to $30 million each year. These credits are awarded on a first-come, first-served basis. This means that it is important for you to act quickly to reserve your credit and ensure that a student at your preferred school will receive a scholarship at no cost to you!
When do I send my donation?
On the same day you reserve your credit with Department of Revenue, mail a check from your personal account to Scholarships for Kids. To receive the tax credit, the amount of the check must be the same as the amount reserved with Department of Revenue. Checks should be payable to “Scholarships for Kids”. It is important that the check is sent at the same time as the reservation is made.
How do I reserve my credit?
Once we have received and processed your donation, we will confirm your donation with the Department of Revenue. The Department of Revenue will send you a letter confirming the Alabama state income tax credit. Scholarships for Kids will send you a letter that may serve as your donation receipt for federal tax purposes.
How will I receive my credit?
When you reserve a credit for a donation online, you will receive an immediate confirmation from the Alabama Department of Revenue stating that your reservation is complete. After reserving your credit, you will send your donation to us, and we will verify your contribution with the Alabama Department of Revenue once we have deposited your check and determined that the check has cleared. Once we have verified your contribution, you will receive a voucher in the mail that you will submit with your tax return to show that you are entitled to the credit.
May I send a check from my company’s account?
The check must be from the individual donor’s personal account, even if a company is wholly owned by the person claiming the tax credit. The Department of Revenue requires that the donation check be drawn on the account of the person claiming the tax credit. There are exceptions for pass-through entities (S-corps, LLCs); check with your tax professional for guidance.
May I donate items of value or appreciated shares of stock?
Under current law, only cash or checks can be accepted by a scholarship granting organization. Likewise, we are unable to accept credit cards at this time.
Where do I send my check?
Donations may be sent to:
Scholarships for Kids, Inc.
P.O. Box 10204
Birmingham, AL 35202
PARENTS AND STUDENTS
Does my child qualify for a scholarship?
Scholarships are available for students transferring from “failing” public schools to qualified nonpublic schools, and, under some circumstances, to other students from low-income families transferring to or entering qualified nonpublic schools. We encourage you to contact one of our partner schools listed on this website to determine whether your child is eligible for a scholarship to that school.
According to the U.S. Census Bureau, from 2009 to 2013, the median household income level for Alabama is $43,253 and 18.6% Alabamians lived below the federal poverty level. In 2015, the median household income of a family benefitting from a scholarship from Scholarships for Kids was $26,175.
To qualify, the family household income must be below 185% of the Federal Poverty Guideline; those numbers for 2016 are as follows:
Household Size: Household Income May not Exceed:
How can my child apply to receive a scholarship?
To apply for a scholarship, you must apply for admission and be accepted by a participating non-public school under the Alabama Accountability Act. Scholarships for Kids does not accept applications directly from parents/guardians. After completing an application, please bring the application to the participating school to complete tuition and certification information. Each participating school has a username and password to access our application portal and will complete the submission for you. Scholarships for Kids will notifiy the school directly of your application status.