Treasury and the IRS released new federal scholarship tax-credit rules on October 1. The regulatory package provides details on donor credits, student eligibility, and requirements for scholarship-granting organizations.
The package includes proposed rules and companion temporary regulations. Here are the top headlines for donors and families:
• Married couples filing jointly could claim up to $3,400.
• Donors can give across state lines. Someone living in a state that has not opted in could still claim the federal credit by donating to an approved Scholarship Granting Organization (SGO) in a participating state.
• Scholarship eligibility generally follows the student’s residence. A student living in a participating state could attend school elsewhere. Attending school in a participating state would not, by itself, qualify a student who lives in a nonparticipating state.
• Some families could have a simpler income-verification process. The proposed rules provide an eligibility safe harbor for students whose households receive certain government benefits, including food assistance.
Roth&Co will share more information in the coming days as we review the rules and what they mean for donors and families.
This material has been prepared for informational purposes only, and is not intended to provide or be relied upon for legal or tax advice. If you have any specific legal or tax questions regarding this content or related issues, please consult with your professional legal or tax advisor.
