NEW FOR 2015-2016, “Refundable Parental Tax Credit”. Up to $4 million can be applied for directly by parents AFTER they have paid tuition. There was substantial controversy over this direct refundable parental tax credit during the 2015 SC legislative session due to the perception this credit only benefits wealthy families able to pre-pay tuition early. A lot of our families are on monthly tuition payment plans. Palmetto Kids FIRST did not support this direct parental credit as it was pushed by the lobbyist and “paid” advocates which we believe oppose our work and are harming our program.
NOTE: The refundable parental tax credit is a completely separate program from Palmetto Kids FIRST and is administered 100% by the SC Department of Revenue. All questions should be referred to DOR or your SC state legislators.
Sylvan D. Proser, Tax Research Manager
PROCESS FOR CLAIMING THE “REFUNDABLE PARENTAL TAX CREDIT” (As best we have been able to determine with the SC Department of Revenue as of 7/10/2015. Contact DOR above or at TaxCredit@dor.sc.gov for additional questions. See also: https://dor.sc.gov/about/whats-new):
- Your school must first be “approved” by the SC Educational Oversight Committee.
- After your school is approved, parent should write tuition check to school. (Only payments ACTUALLY paid between 7/1/2015 – 6/30/2016 are eligible.)
- After check is delivered to the school, parent should file TC-57A as soon as possible (and potentially no later than June 30, 2016). Credits are awarded on first-come, first-served basis until the $4 million cap is reached.
FORM TC-57A (file by Jun 30, 2016 – only a few days left): Click HERE.
FORM I-361 (just for information as it appears to be used with your 2015 SC Tax return – but FILE THE TC-57A first!!!): Click HERE.
UPDATE: Income taxable? Consult your tax adviser to determine if the “refundable parental tax credit” is taxable (Federal & State) as income. We have confirmed reports that the lobbyist and “paid” advocates that pushed the parental tax credit are now “confessing” to parents that the refundable parental tax credit will be subject to Federal & State income taxes. As such, we estimate the $4 million of refundable parental tax credits will create a tax profit windfall for Washington, D.C. of $1.4 million (at a 35% Federal tax rate) and $280,000 for SC (at a 7% SC tax rate). SFO SCHOLARSHIPS ARE 100% INCOME TAX FREE TO RECIPIENTS by federal law. The SC Department of Revenue has been unable to confirm to us verbally or in writing that this new “refundable parental tax credit” will be Federal & State income tax free.
UPDATE: Impact on income based benefits? We have had numerous parents concerned that the imputed income of the parental tax credit will substantially impact their government benefits and/or items such as they Affordable Care Act costs / healthcare. Please consult your applicable adviser.
LEGAL DISCLAIMER: The above is for general informational purposes only and should not be construed as legal or tax advice. Palmetto Kids FIRST Scholarship Program, Inc. does not provide legal or tax advise. All parties should consult their tax adviser or attorney.