5/15/2013MAXIMIZING COMMUNITYIMPACT USING THE PENNSYLVANIAEDUCATIONAL IMPROVEMENT TAXCREDIT PROGRAM (EITC)GREG LOWE, (PART...
5/15/2013FRAUD ENGAGEMENTFROM A TO ZSAMUEL BOWERCRAFT, MSIS, CISA&DAVID HAMMARBERG,CPA, CFE, CISSP, MCSE, WXYZ
05/15/13
5/15/2013MAXIMIZING COMMUNITYIMPACT USING THE PENNSYLVANIAEDUCATIONAL IMPROVEMENT TAXCREDIT PROGRAM (EITC)GREG LOWE, (PART...
Michael Eby• CPA• Supervisor• Tax SpecialistGreg Lowe• COO• Management &Consulting SpecialistA BIT ABOUT US
WHAT IS THE EITC PROGRAM?• Administered by the Department of Community and Economic Development (DCED)• A tax credit is aw...
WHAT IS THE BENEFIT FOR BUSINESSES PARTICIPATING INTHE EITC PROGRAM?• Either a 75% tax credit (1 year commitment) or 90% t...
WHAT ARE THE ELIGIBLE TAXES FOR WHICH THE CREDITCAN BE APPLIED?• Capital Stock/Foreign Franchise Tax• Corporate Net Income...
EXAMPLE 1 - C CORPORATIONSWithout EITCcontributionContribution (2-yearcommitment)Net Taxable Income prior to contribution ...
EXAMPLE 1 - C CORPORATIONSWithout EITCcontributionContribution (2-yearcommitment)Net Taxable Income prior to contribution ...
EXAMPLE 1 - C CORPORATIONSWithout EITCcontributionContribution (2-yearcommitment)Net Taxable Income prior to contribution ...
EXAMPLE 1 - C CORPORATIONSWithout EITCcontributionContribution (2-yearcommitment)Net Taxable Income prior to contribution ...
EXAMPLE 1 - C CORPORATIONSWithout EITCcontributionContribution (2-yearcommitment)Net Taxable Income prior to contribution ...
EXAMPLE 1 - C CORPORATIONSWithout EITCcontributionContribution (2-yearcommitment)Net Taxable Income prior to contribution ...
EXAMPLE 1 - C CORPORATIONSWithout EITCcontributionContribution (2-yearcommitment)Net Taxable Income prior to contribution ...
EXAMPLE 1 - C CORPORATIONSWithout EITCcontributionContribution (2-yearcommitment)Net Taxable Income prior to contribution ...
EXAMPLE 2 - PASS-THROUGH ENTITIESWithout EITCcontributionContribution (2-yearcommitment)Net Taxable Income prior to contri...
EXAMPLE 2 - PASS-THROUGH ENTITIESWithout EITCcontributionContribution (2-yearcommitment)Net Taxable Income prior to contri...
EXAMPLE 2 - PASS-THROUGH ENTITIESWithout EITCcontributionContribution (2-yearcommitment)Net Taxable Income prior to contri...
EXAMPLE 2 - PASS-THROUGH ENTITIESWithout EITCcontributionContribution (2-yearcommitment)Net Taxable Income prior to contri...
EXAMPLE 2 - PASS-THROUGH ENTITIESWithout EITCcontributionContribution (2-yearcommitment)Net Taxable Income prior to contri...
EXAMPLE 2 - PASS-THROUGH ENTITIESWithout EITCcontributionContribution (2-yearcommitment)Net Taxable Income prior to contri...
EXAMPLE 2 - PASS-THROUGH ENTITIESWithout EITCcontributionContribution (2-yearcommitment)Net Taxable Income prior to contri...
EXAMPLE 2 - PASS-THROUGH ENTITIESWithout EITCcontributionContribution (2-yearcommitment)Net Taxable Income prior to contri...
EXAMPLE 2 - PASS-THROUGH ENTITIESWithout EITCcontributionContribution (2-yearcommitment)Net Taxable Income prior to contri...
HOW DOES A BUSINESS APPLY FOR THE CREDIT?• July 1, 2013 for first year applicants• First come, first served by day basis• ...
IMPORTANT LIMITATIONS/DEADLINES TO KEEP IN MIND• $750,000 total credit limit per business per year• $200,000 maximum credi...
HOW DOES THE CREDIT GET REPORTED ON THETAX RETURNS?• Credit is available for the tax year in which the contribution was ma...
OPPORTUNITY SCHOLARSHIP TAX CREDIT PROGRAM(“EITC 2.0”)• New in 2012 as part of the Governor’s State Budget• Organizations ...
EITC PROGRAM CONTACT INFORMATIONPennsylvania Department of Community & Economic Development(DCED), Center for Business Fin...
Michael Ebymeby@macpas.comGreg Loweglowe@macpas.comA BIT ABOUT US
05/15/13
5/15/2013FRAUD ENGAGEMENTFROM A TO ZSAMUEL BOWERCRAFT, MSIS, CISA&DAVID HAMMARBERG,CPA, CFE, CISSP, MCSE, WXYZ
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McKonly & Asbury Webinar - Maximizing Community Impact Through EITC

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We had another great webinar presented by Greg Lowe (Partner/COO) and Michael Eby, CPA (Tax Supervisor) with McKonly & Asbury! Thank you to everyone that attended.

We discussed Pennsylvania’s Educational Improvement Tax Credit Program and learned what this program is all about, what type of businesses can participate, and what the eligible taxes are for which the credit can be applied. We then reviewed several examples for increased understanding of the tax credit and wrapped up with instructions for how an organization can apply.

Check out our Upcoming Events page for news and updates on our future seminars and webinars.

For more information on this topic or to submit a question for Greg or Michael, use our contact page at www.macpas.com/contact or email them directly at glowe@macpas.com and meby@macpas.com.

http://www.macpas.com/webinar-recap-maximizing-community-impact-through-eitc

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  • May 15 th -not just for year 2 of 2, but also for year 1 of a new 2 year commitment after a two year commitment had been fulfilled.
  • McKonly & Asbury Webinar - Maximizing Community Impact Through EITC

    1. 1. 5/15/2013MAXIMIZING COMMUNITYIMPACT USING THE PENNSYLVANIAEDUCATIONAL IMPROVEMENT TAXCREDIT PROGRAM (EITC)GREG LOWE, (PARTNER, COO)MICHAEL EBY, CPA, (TAX SUPERVISOR)
    2. 2. 5/15/2013FRAUD ENGAGEMENTFROM A TO ZSAMUEL BOWERCRAFT, MSIS, CISA&DAVID HAMMARBERG,CPA, CFE, CISSP, MCSE, WXYZ
    3. 3. 05/15/13
    4. 4. 5/15/2013MAXIMIZING COMMUNITYIMPACT USING THE PENNSYLVANIAEDUCATIONAL IMPROVEMENT TAXCREDIT PROGRAM (EITC)GREG LOWE, (PARTNER, COO)MICHAEL EBY, CPA, (TAX SUPERVISOR)
    5. 5. Michael Eby• CPA• Supervisor• Tax SpecialistGreg Lowe• COO• Management &Consulting SpecialistA BIT ABOUT US
    6. 6. WHAT IS THE EITC PROGRAM?• Administered by the Department of Community and Economic Development (DCED)• A tax credit is awarded to businesses that make contributions to qualified:• Scholarship Organizations• Educational Improvement Organizations• Pre-K Scholarship Organizations• List of qualifying organizations can be found on DCED website - www.newpa.com• 2012-2013 State budget has allocated $100 million for program
    7. 7. WHAT IS THE BENEFIT FOR BUSINESSES PARTICIPATING INTHE EITC PROGRAM?• Either a 75% tax credit (1 year commitment) or 90% tax credit (2 year commitment) upto $750,000 maximum annual credit• Scholarship Organizations• Educational Improvement Organizations• Contributions to Pre-Kindergarten Scholarship Organizations:• 100% credit for first $10,000 contributed, 90% credit after that up to a maximum$200,000 credit per year
    8. 8. WHAT ARE THE ELIGIBLE TAXES FOR WHICH THE CREDITCAN BE APPLIED?• Capital Stock/Foreign Franchise Tax• Corporate Net Income Tax• Bank and Trust Shares Tax• Title Insurance Companies Shares Tax• Insurance Premiums Tax• Mutual Thrift Institution Tax• Tax under the Insurance Company Law of 1921• Personal Income Tax
    9. 9. EXAMPLE 1 - C CORPORATIONSWithout EITCcontributionContribution (2-yearcommitment)Net Taxable Income prior to contribution and income taxes 300,000 300,000EITC Contribution N/A 10,000State Addback of contributions qualifying for PA EITC N/A N/AAdjusted PA Taxable Income 300,000 290,000PA State Income Tax (9.99%) (29,970) (28,971)Reduction in State Income Tax Due To Credit 9,000PA State Income Tax Expense After Reductions (29,970) (19,971)Adjusted Federal Taxable Income After State Taxes 270,030 270,029Federal income taxes 88,562 88,562Federal Income Tax Savings 0PA Income Tax Savings 9,999Total Tax Savings 9,999Net Cost of $10,000 EITC Contribution 1
    10. 10. EXAMPLE 1 - C CORPORATIONSWithout EITCcontributionContribution (2-yearcommitment)Net Taxable Income prior to contribution and income taxes 300,000 300,000EITC Contribution N/A 10,000State Addback of contributions qualifying for PA EITC N/A N/AAdjusted PA Taxable Income 300,000 290,000PA State Income Tax (9.99%) (29,970) (28,971)Reduction in State Income Tax Due To Credit 9,000PA State Income Tax Expense After Reductions (29,970) (19,971)Adjusted Federal Taxable Income After State Taxes 270,030 270,029Federal income taxes 88,562 88,562Federal Income Tax Savings 0PA Income Tax Savings 9,999Total Tax Savings 9,999Net Cost of $10,000 EITC Contribution 1
    11. 11. EXAMPLE 1 - C CORPORATIONSWithout EITCcontributionContribution (2-yearcommitment)Net Taxable Income prior to contribution and income taxes 300,000 300,000EITC Contribution N/A 10,000State Addback of contributions qualifying for PA EITC N/A N/AAdjusted PA Taxable Income 300,000 290,000PA State Income Tax (9.99%) (29,970) (28,971)Reduction in State Income Tax Due To Credit 9,000PA State Income Tax Expense After Reductions (29,970) (19,971)Adjusted Federal Taxable Income After State Taxes 270,030 270,029Federal income taxes 88,562 88,562Federal Income Tax Savings 0PA Income Tax Savings 9,999Total Tax Savings 9,999Net Cost of $10,000 EITC Contribution 1
    12. 12. EXAMPLE 1 - C CORPORATIONSWithout EITCcontributionContribution (2-yearcommitment)Net Taxable Income prior to contribution and income taxes 300,000 300,000EITC Contribution N/A 10,000State Addback of contributions qualifying for PA EITC N/A N/AAdjusted PA Taxable Income 300,000 290,000PA State Income Tax (9.99%) (29,970) (28,971)Reduction in State Income Tax Due To Credit 9,000PA State Income Tax Expense After Reductions (29,970) (19,971)Adjusted Federal Taxable Income After State Taxes 270,030 270,029Federal income taxes 88,562 88,562Federal Income Tax Savings 0PA Income Tax Savings 9,999Total Tax Savings 9,999Net Cost of $10,000 EITC Contribution 1
    13. 13. EXAMPLE 1 - C CORPORATIONSWithout EITCcontributionContribution (2-yearcommitment)Net Taxable Income prior to contribution and income taxes 300,000 300,000EITC Contribution N/A 10,000State Addback of contributions qualifying for PA EITC N/A N/AAdjusted PA Taxable Income 300,000 290,000PA State Income Tax (9.99%) (29,970) (28,971)Reduction in State Income Tax Due To Credit 9,000PA State Income Tax Expense After Reductions (29,970) (19,971)Adjusted Federal Taxable Income After State Taxes 270,030 270,029Federal income taxes 88,562 88,562Federal Income Tax Savings 0PA Income Tax Savings 9,999Total Tax Savings 9,999Net Cost of $10,000 EITC Contribution 1
    14. 14. EXAMPLE 1 - C CORPORATIONSWithout EITCcontributionContribution (2-yearcommitment)Net Taxable Income prior to contribution and income taxes 300,000 300,000EITC Contribution N/A 10,000State Addback of contributions qualifying for PA EITC N/A N/AAdjusted PA Taxable Income 300,000 290,000PA State Income Tax (9.99%) (29,970) (28,971)Reduction in State Income Tax Due To Credit 9,000PA State Income Tax Expense After Reductions (29,970) (19,971)Adjusted Federal Taxable Income After State Taxes 270,030 270,029Federal income taxes 88,562 88,562Federal Income Tax Savings 0PA Income Tax Savings 9,999Total Tax Savings 9,999Net Cost of $10,000 EITC Contribution 1
    15. 15. EXAMPLE 1 - C CORPORATIONSWithout EITCcontributionContribution (2-yearcommitment)Net Taxable Income prior to contribution and income taxes 300,000 300,000EITC Contribution N/A 10,000State Addback of contributions qualifying for PA EITC N/A N/AAdjusted PA Taxable Income 300,000 290,000PA State Income Tax (9.99%) (29,970) (28,971)Reduction in State Income Tax Due To Credit 9,000PA State Income Tax Expense After Reductions (29,970) (19,971)Adjusted Federal Taxable Income After State Taxes 270,030 270,029Federal income taxes 88,562 88,562Federal Income Tax Savings 0PA Income Tax Savings 9,999Total Tax Savings 9,999Net Cost of $10,000 EITC Contribution 1
    16. 16. EXAMPLE 1 - C CORPORATIONSWithout EITCcontributionContribution (2-yearcommitment)Net Taxable Income prior to contribution and income taxes 300,000 300,000EITC Contribution N/A 10,000State Addback of contributions qualifying for PA EITC N/A N/AAdjusted PA Taxable Income 300,000 290,000PA State Income Tax (9.99%) (29,970) (28,971)Reduction in State Income Tax Due To Credit 9,000PA State Income Tax Expense After Reductions (29,970) (19,971)Adjusted Federal Taxable Income After State Taxes 270,030 270,029Federal income taxes 88,562 88,562Federal Income Tax Savings 0PA Income Tax Savings 9,999Total Tax Savings 9,999Net Cost of $10,000 EITC Contribution 1
    17. 17. EXAMPLE 2 - PASS-THROUGH ENTITIESWithout EITCcontributionContribution (2-yearcommitment)Net Taxable Income prior to contribution and income taxes 300,000 300,000EITC Contribution N/A 0State Addback of expenses qualifying for PA EITC N/A 0Adjusted PA Taxable Income 300,000 300,000PA State Income Tax (3.07%) (9,210) (9,210)Reduction in State Income Tax (Itemized Deductions) 9,000Federal Charitable Contribution Deduction (10,000)Adjusted Federal Taxable Income After Itemized Deductions 290,790 289,790Federal income taxes (Assuming 35% marginal bracket) 101,777 101,427Federal Income Tax Savings 350PA Income Tax Savings 9,000Total Tax Savings 9,350Net Cost of $10,000 EITC Contribution 650
    18. 18. EXAMPLE 2 - PASS-THROUGH ENTITIESWithout EITCcontributionContribution (2-yearcommitment)Net Taxable Income prior to contribution and income taxes 300,000 300,000EITC Contribution N/A 0State Addback of expenses qualifying for PA EITC N/A 0Adjusted PA Taxable Income 300,000 300,000PA State Income Tax (3.07%) (9,210) (9,210)Reduction in State Income Tax (Itemized Deductions) 9,000Federal Charitable Contribution Deduction (10,000)Adjusted Federal Taxable Income After Itemized Deductions 290,790 289,790Federal income taxes (Assuming 35% marginal bracket) 101,777 101,427Federal Income Tax Savings 350PA Income Tax Savings 9,000Total Tax Savings 9,350Net Cost of $10,000 EITC Contribution 650
    19. 19. EXAMPLE 2 - PASS-THROUGH ENTITIESWithout EITCcontributionContribution (2-yearcommitment)Net Taxable Income prior to contribution and income taxes 300,000 300,000EITC Contribution N/A 0State Addback of expenses qualifying for PA EITC N/A 0Adjusted PA Taxable Income 300,000 300,000PA State Income Tax (3.07%) (9,210) (9,210)Reduction in State Income Tax (Itemized Deductions) 9,000Federal Charitable Contribution Deduction (10,000)Adjusted Federal Taxable Income After Itemized Deductions 290,790 289,790Federal income taxes (Assuming 35% marginal bracket) 101,777 101,427Federal Income Tax Savings 350PA Income Tax Savings 9,000Total Tax Savings 9,350Net Cost of $10,000 EITC Contribution 650
    20. 20. EXAMPLE 2 - PASS-THROUGH ENTITIESWithout EITCcontributionContribution (2-yearcommitment)Net Taxable Income prior to contribution and income taxes 300,000 300,000EITC Contribution N/A 0State Addback of expenses qualifying for PA EITC N/A 0Adjusted PA Taxable Income 300,000 300,000PA State Income Tax (3.07%) (9,210) (9,210)Reduction in State Income Tax (Itemized Deductions) 9,000Federal Charitable Contribution Deduction (10,000)Adjusted Federal Taxable Income After Itemized Deductions 290,790 289,790Federal income taxes (Assuming 35% marginal bracket) 101,777 101,427Federal Income Tax Savings 350PA Income Tax Savings 9,000Total Tax Savings 9,350Net Cost of $10,000 EITC Contribution 650
    21. 21. EXAMPLE 2 - PASS-THROUGH ENTITIESWithout EITCcontributionContribution (2-yearcommitment)Net Taxable Income prior to contribution and income taxes 300,000 300,000EITC Contribution N/A 0State Addback of expenses qualifying for PA EITC N/A 0Adjusted PA Taxable Income 300,000 300,000PA State Income Tax (3.07%) (9,210) (9,210)Reduction in State Income Tax (Itemized Deductions) 9,000Federal Charitable Contribution Deduction (10,000)Adjusted Federal Taxable Income After Itemized Deductions 290,790 289,790Federal income taxes (Assuming 35% marginal bracket) 101,777 101,427Federal Income Tax Savings 350PA Income Tax Savings 9,000Total Tax Savings 9,350Net Cost of $10,000 EITC Contribution 650
    22. 22. EXAMPLE 2 - PASS-THROUGH ENTITIESWithout EITCcontributionContribution (2-yearcommitment)Net Taxable Income prior to contribution and income taxes 300,000 300,000EITC Contribution N/A 0State Addback of expenses qualifying for PA EITC N/A 0Adjusted PA Taxable Income 300,000 300,000PA State Income Tax (3.07%) (9,210) (9,210)Reduction in State Income Tax (Itemized Deductions) 9,000Federal Charitable Contribution Deduction (10,000)Adjusted Federal Taxable Income After Itemized Deductions 290,790 289,790Federal income taxes (Assuming 35% marginal bracket) 101,777 101,427Federal Income Tax Savings 350PA Income Tax Savings 9,000Total Tax Savings 9,350Net Cost of $10,000 EITC Contribution 650
    23. 23. EXAMPLE 2 - PASS-THROUGH ENTITIESWithout EITCcontributionContribution (2-yearcommitment)Net Taxable Income prior to contribution and income taxes 300,000 300,000EITC Contribution N/A 0State Addback of expenses qualifying for PA EITC N/A 0Adjusted PA Taxable Income 300,000 300,000PA State Income Tax (3.07%) (9,210) (9,210)Reduction in State Income Tax (Itemized Deductions) 9,000Federal Charitable Contribution Deduction (10,000)Adjusted Federal Taxable Income After Itemized Deductions 290,790 289,790Federal income taxes (Assuming 35% marginal bracket) 101,777 101,427Federal Income Tax Savings 350PA Income Tax Savings 9,000Total Tax Savings 9,350Net Cost of $10,000 EITC Contribution 650
    24. 24. EXAMPLE 2 - PASS-THROUGH ENTITIESWithout EITCcontributionContribution (2-yearcommitment)Net Taxable Income prior to contribution and income taxes 300,000 300,000EITC Contribution N/A 0State Addback of expenses qualifying for PA EITC N/A 0Adjusted PA Taxable Income 300,000 300,000PA State Income Tax (3.07%) (9,210) (9,210)Reduction in State Income Tax (Itemized Deductions) 9,000Federal Charitable Contribution Deduction (10,000)Adjusted Federal Taxable Income After Itemized Deductions 290,790 289,790Federal income taxes (Assuming 35% marginal bracket) 101,777 101,427Federal Income Tax Savings 350PA Income Tax Savings 9,000Total Tax Savings 9,350Net Cost of $10,000 EITC Contribution 650
    25. 25. EXAMPLE 2 - PASS-THROUGH ENTITIESWithout EITCcontributionContribution (2-yearcommitment)Net Taxable Income prior to contribution and income taxes 300,000 300,000EITC Contribution N/A 0State Addback of expenses qualifying for PA EITC N/A 0Adjusted PA Taxable Income 300,000 300,000PA State Income Tax (3.07%) (9,210) (9,210)Reduction in State Income Tax (Itemized Deductions) 9,000Federal Charitable Contribution Deduction (10,000)Adjusted Federal Taxable Income After Itemized Deductions 290,790 289,790Federal income taxes (Assuming 35% marginal bracket) 101,777 101,427Federal Income Tax Savings 350PA Income Tax Savings 9,000Total Tax Savings 9,350Net Cost of $10,000 EITC Contribution 650
    26. 26. HOW DOES A BUSINESS APPLY FOR THE CREDIT?• July 1, 2013 for first year applicants• First come, first served by day basis• www.newpa.com• New requirement for 2013: “Single Application for Assistance”• Hard copy signature page also required• Renewal applications due between May 15th and June 28th 2013
    27. 27. IMPORTANT LIMITATIONS/DEADLINES TO KEEP IN MIND• $750,000 total credit limit per business per year• $200,000 maximum credit for Pre-K scholarship• Must make contribution within 60 days of date of approval letter• DCED must receive written notification of contribution within 90 days of approvalletter• Cannot be sold, assigned, or carried forward except for an election to “pass-through”the credit to owners• Credits can be utilized against 100% of taxpayer’s tax liability.
    28. 28. HOW DOES THE CREDIT GET REPORTED ON THETAX RETURNS?• Credit is available for the tax year in which the contribution was made• PA Rev-1123 “EITC Election Form”• PA Schedule OC• If passing through the credit to the owners, they can elect to utilize the credit in thecurrent tax year or the next tax year
    29. 29. OPPORTUNITY SCHOLARSHIP TAX CREDIT PROGRAM(“EITC 2.0”)• New in 2012 as part of the Governor’s State Budget• Organizations that provide tuition assistance to eligible students residing in theboundaries of a “low achieving school”• Similar guidelines as the original EITC Program• $50 million allocated to program from 2012-2013 budget
    30. 30. EITC PROGRAM CONTACT INFORMATIONPennsylvania Department of Community & Economic Development(DCED), Center for Business Financing-Tax Credit Division• Website: www.newpa.com• Phone number: (717) 787-7120• Email: RA-EITC@pa.gov
    31. 31. Michael Ebymeby@macpas.comGreg Loweglowe@macpas.comA BIT ABOUT US
    32. 32. 05/15/13
    33. 33. 5/15/2013FRAUD ENGAGEMENTFROM A TO ZSAMUEL BOWERCRAFT, MSIS, CISA&DAVID HAMMARBERG,CPA, CFE, CISSP, MCSE, WXYZ

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