Ohio Income Tax Credit is given:

• For cash donations to SGOs made before April 15 of the following tax year
• Up to $1,500 for spouses filing joint return or up to $750 for individual taxpayers
• Investors in pass-through entities may claim their proportionate or distributive share of
  the credit

The Scholarship Granting Organization must:

• Be a 501(c)(3) exempt nonprofit
• Be certified by the Ohio Attorney General
• Primarily award scholarships to K-12 students
• Prioritize low-income students

Forms Preparation:

• Ohio IT 1040, Schedule of Credits, Line 15
• Ohio IT 1040, Line 9
• Attach receipt acknowledging the taxpayer’s SGO contribution

See https://codes.ohio.gov/ohio-revised-code/section-5747.73 and https://codes.ohio.gov/ohioadministrative-code/rule-109:1-8-01

After you make a donation to your chosen SGO they should provide you with an
acknowledgement (receipt) of your donation. You or your tax-preparer should attach the
acknowledgement to your Ohio 1040 IT tax form and keep it in you records to substantiate any
federal tax deduction claimed.

Yes. Any amount up to $750 is creditable, in the amount donated.

Yes. Previously the Ohio statute used singular language “a taxpayer” and so it was necessary
that both the married partners separately make donations in their individual names before the full
$1,500 could be credited. Recently, the statute was revised and (effective April 3, 2023) it now
contemplates that, if filing a joint return, the scholarship credit can be claimed (up to $1,500)
regardless of which spouse makes the donation.

Ohio has a graduated income tax rate which for 2022 was –

So, if your Ohio adjusted gross income (less personal and dependent exemptions) is more than
$44,250 you are likely paying in excess of $750 of Ohio income taxes. You can verify the
amount(s) you paid in prior tax years by looking at your filed Ohio IT 1040 form(s).

You can claim a credit for the prior tax year so long as you donate by April 15th of the following
year. You must give by the traditional “tax-day”. If you or your tax preparer plan on filing an
extension request, make sure you donate by April 15th if you wish to take advantage of the Ohio
SGO income tax credit

The scholarship credit could still be taken, as long as it does not exceed your total Ohio income
tax liability. Nonrefundable means merely that you cannot use the credit to create a refund
exceeding the tax you owe.

Example 1 – You had $2,000 in Ohio income taxes withheld during the year, but your Ohio
income tax liability is only $1,750, so (before the donation) you are expecting a refund of
$250. In the same year you make a donation of $750. You should be able to claim the full
$750 scholarship credit because it is less than your $1,750 tax liability. And, you might then
expect an Ohio income tax refund of $1,000.

Example 2 – You have $1,000 in Ohio income taxes withheld during the year, but your Ohio
income tax liability is only $500, so (before the donation) you are expecting a refund of $500.
In the same year you make a donation of $750. You may claim the credit only up to your
$500 tax liability. So, you might then expect an Ohio income tax refund of $1,000.

Definitely. Scholarship Granting Organizations must be certified annually and submit
information / documentation, to the Ohio Attorney General’s satisfaction, establishing that fact.

For line itemizers, yes. An individual who itemizes deductions and makes a payment to a taxexempt entity in return for local or state tax credit may treat the payment as a payment of state or
local tax for purposes of section IRC 164. IRS Notice 2019-12

If a taxpayer (including a trust or decedent estate) makes a charitable contribution they are
ordinarily entitled to a federal tax deduction under IRC 170. However, if the charitable
contribution results in a state or local tax credit, the credit is deemed a return benefit, or quid pro
quo, and so charitable contribution deduction under IRC 170 is disallowed. Recognizing the
unfair consequences resulting from these regulations on line-itemizing taxpayers, the Treasury
Department and the IRS have issued guidance providing the following safe-harbor:

“An individual who itemizes deductions and makes a payment to a section 170(c) entity in return
for a state or local tax credit may treat the portion of such payment that is or will be disallowed
as a charitable contribution deduction under section 170 as a payment of state or local tax for
purposes of section 164.” Treasury Decision 9864, 84 FR 27513

Forms Preparation:

• Form 1040, Schedule A, Lines 5(a), (e) and 6
• Form 1040, Line 12

Many Scholarship Granting Organization have a religious affiliation. Some do not. The law
allows SGOs to work with any school (whether they be a chartered nonpublic school or a non chartered, non-tax supported school) to award academic scholarships to K-12 children,
particularly to those in-need.

No. Each SGO non-profit should have individual grant-making procedures approved by the IRS
which enable scholarship grants to be excludable from recipients’ gross income.

SGOs may grant academic scholarship awards to students who are not low-income. However, to
be annually certified as an SGO, they must prioritize awarding scholarships to low-income K-12
students.

“Low income” means the students household income is under three hundred percent (300%)
of the US Census poverty threshold or that the student, or their guardians, receive public
assistance (not medical assistance) under a program administered by jobs & family services or a
county agency. The 300% low-income poverty threshold is determined based on household
income and the number of members of the family. Here is table showing these income numbers,
per family size:

Different schools and SGOs ask for different information to substantiate scholarship awards.
Examples include: reports prepared by grant/aid assessment partners with whom the school
works to collect and verify income information, or proof that the student, or their guardians,
receive public assistance.

If they live in Ohio, Yes. Every year, each Ohio income taxpayer can claim their credit. And,
even if some individuals among your supporters live out of state, they probably have friends in
Ohio they might like to tell.

Nothing in the statute or rule related to certification as an SGO specifies where the school must
be located for a student to receive a scholarship. Also, how the SGO ultimately directs the
taxpayer’s donation is not something that the Ohio Department of Taxation considers when
determining a taxpayer’s eligibility for the credit.

Yes. Check that the SGO contribution form contains a memo line/location where you can
indicate which school you wish to support. But note, you cannot indicate a specific student(s) to
receive your donated funds.