FAQ for Donations to Student Scholarship Organizations.
What is this program?
The 2015 Montana legislature passed legislation that provides tax credits for individuals and corporations for charitable donations to a Student Scholarship Organization (SSO) for the purpose of funding scholarships benefiting students attending qualified education organizations. The amount of the credit is equal to the amount of the donation, not to exceed $150 per taxpayer. The aggregate amount of tax credit available for donation to an SSO is limited to $3 million in tax year 2016. If the limit is reached in a year, the aggregate amount will increase by 10% in the succeeding tax year.
A scholarship awarded by an SSO to an eligible student may not exceed one half of the per-pupil average expenditure of public schools. In addition, although an eligible student can accept more than one scholarship, the total amount of the awards to that student may not exceed 50% of the per-pupil average expenditure of total public school expenditures. Scholarship funds must be delivered directly to the qualified education provider selected by the student’s parents or legal guardians. The scholarship does not constitute a taxable amount.
How can I make a donation and receive the tax credit?
This website will take you through the steps of entering your taxpayer identification data and registering your donation or pledge. Registering the donation or pledge will make the donor eligible for the tax credit. To claim the credit on your tax return, you must donate the funds directly to the SSO no later than December 31 in the year that you intend to claim the credit, and indicate the confirmation code you received after registering your pledge or donation. The Department of Revenue (DOR) does not collect donations.
What if I misplace my confirmation code?
You can retrieve your confirmation code at any time on this web site.
How do I select the SSO to which I wish to donate?
You must select an SSO among the SSO registered with DOR. A list of registered SSOs is provided on this site when and before you register your pledge.
What are the requirements to become an SSO?
To become a registered SSO, an organization must first submit a notice to the DOR of its intent to operate as an SSO prior to accepting donations. This submission can be done online, and must identify at least two qualified educational providers they will provide scholarships to. The program also requires that an SSO must be a 501(c)(3) nonprofit, or has requested to obtain 501(c)(3) status from the IRS. An SSO must obligate at least 90% of its annual revenue for scholarships, and the average scholarship for an academic year must not exceed 30% of the per-pupil average of total public school expenditures. It must also complete an annual fiscal review of its accounts conducted by an independent CPA and submit the review to the department within 150 days of the close of the calendar year.
Can I donate more than $150 to an SSO or to several SSOs?
Yes, you can donate as much as you want to an SSO or several SSOs in one or multiple donations. However, the total credit you may claim cannot exceed $150 each year.
Do I have to donate $150?
No, you can donate any amount you wish. The credit amount for donating less than $150 is limited to the amount of the donation. If you donate more than $150, you will only receive a tax credit for $150.
When can I donate to qualify for the credit?
You must make your donation during the calendar year for which you wish to claim the tax credit.
What if I file a joint tax return?
Each taxpayer can receive up to $150 of tax credit. If you click the option on the taxpayer identification entry screen to indicate you are filing a joint return, the available tax credit for your donation will be $300.
Can I make multiple donations through the year?
Yes, your ePass logon connects you to all data you have entered and donations or pledges you have recorded. You can donate $100 in January and another $50 in December if there are tax credits still available.
Can I obtain a credit for home schooling?
No, the bill specifically excludes home schooling from the definition of qualified education provider.
Can I deduct my donation to a 501(c)(3) organization from my Montana income tax return and still receive a credit?
No, you cannot claim a deduction and a credit for the same amount of donation. However, the excess charitable donation that exceed the amount of credit claimed may be used as an exclusion, deduction or credit whichever applies.
May I choose to donate to a particular education provider and receive a tax credit under this program?
No, the SSO receiving your donation may not restrict or reserve scholarships for use at a particular education provider and must allow parents or legal guardian to enroll an eligible student with any qualified education provider of their choice.
Can a business donate to an SSO and receive the credit?
Yes, corporations, pass-through entities, small business corporations, or partnerships can donate to an SSO and claim the credit. If the credit is claimed by a small business corporation, a pass-through or a partnership, the credit must be attributed to the shareholders, owners, or partners using the same proportion as used to report the entity’s income and loss.
Can an estate or a trust donate to an SSO and receive a credit?
Yes, an estate or a trust can qualify for the credit. If the estate or the trust does not use all the credit, the residual credit may be attributed to each beneficiary of the estate or trust in the same proportion used to report its income.
Who can I contact if I have questions not covered by this information page?
For problems with the web site or questions about the tax credit program or donations to an SSO, contact the Department of Revenue at 866-859-2254. For questions about donations to Innovative Educational Programs in public schools, contact the Office of Public Instruction at 406-444-3249.