a)
For taxable years beginning on and after January 1, 2018, and ending before
January 1, 2023, a taxpayer may claim a credit against the income tax imposed
under IITA Section 201(a) and (b) in an amount equal to 75% of the qualified
contribution amount awarded under the Invest in Kids Act that is shown on the
Certificate of Receipt issued by an approved scholarship granting organization
under 86 Ill. Adm. Code
1000.500. The credit may not be
applied against the personal property replacement tax imposed under IITA
Section 201(c) and (d).
b) The
credit allowed under this Section may be taken in the taxable year that
includes the date of the Certificate of Receipt issued by an approved
scholarship granting organization under 86 Ill. Adm. Code
1000.500. The credit may not be
transferred.
The credit may not be carried back and may not reduce the
taxpayer's liability to less than zero. If the amount of the credit exceeds the
tax liability for the year, the excess may be carried forward and applied to
the tax liability of the 5 taxable years following the excess credit year. The
credit shall be applied to the earliest year for which there is a tax
liability. If there are credits from more than one tax year that are available
to offset a liability, the earlier credit shall be applied first.
(IITA Section 224(c))
c) In the
case of a credit earned by a partnership or subchapter S corporation, the
credit passes through to the owners as provided in the partnership agreement
under IRC section 704(a) or in proportion to their ownership of the stock of
the subchapter S corporation under IRC section 1366(a). The credit earned by a
partnership or subchapter S corporation will be treated as earned by its owners
as of the last day of the taxable year of the partnership or subchapter S
corporation in which the Certificate of Receipt is issued by an approved
scholarship granting organization under 86 Ill. Adm. Code
1000.500, and shall be allowed
to each owner in the taxable year of the owner in which the taxable year of the
partnership or subchapter S corporation ends.
d)
A credit awarded under the Invest
in Kids Act may not be claimed for any qualified contribution for which the
taxpayer claims a federal income tax deduction. (IITA Section
224(d))
e) A taxpayer shall retain
and provide at the request of the Department the Certificate of Receipt issued
by an approved scholarship granting organization and, in the case of a partner
in a partnership or shareholder of a subchapter S corporation that earned the
credit, a Schedule K-1-P or other written statement from the partnership or
subchapter S corporation stating the portion of the total credit shown on the
Certificate of Receipt that is allowed to that partner or shareholder and the
taxable year of the partnership or subchapter S corporation in which the
Certificate of Receipt was issued.
f) EXAMPLE 1: Individual A contributes $5,000
to an approved scholarship granting organization on January 25, 2018.
Individual A receives a Certificate of Receipt in the amount of $5,000. On
April 1, 2019, Individual A files a 2018 U.S. Form 1040 with Schedule A
Itemized Deductions. Individual A does not include any part of the $5,000
contribution under Gifts to Charity on Schedule A. Individual A is entitled to
claim an Invest in Kids tax credit in the amount of $3,750 on Individual A's
2018 Form IL-1040, Schedule 1299-C.
EXAMPLE 2: Individual B contributes $5,000 to an approved
scholarship granting organization on January 25, 2018. Individual B receives a
Certificate of Receipt in the amount of $5,000. On April 1, 2019, Individual B
files a 2018 U.S. Form 1040 with Schedule A Itemized Deductions. Individual B
includes $1,250 (25% of the qualified contribution) under Gifts to Charity on
Schedule A. Individual B is not entitled to claim any Invest in Kids tax credit
on Individual B's 2018 Form IL-1040, Schedule 1299-C.
EXAMPLE 3: Corporation C contributes $1 million to an
approved scholarship granting organization on January 5, 2018. Corporation C
receives a Certificate of Receipt in the amount of $1 million. On October 15,
2019, Corporation C files a 2018 U.S. Form 1120 and excludes the $1 million
from the charitable contributions line of the return. Corporation C is entitled
to claim an Invest in Kids tax credit in the amount of $750,000 on Corporation
C's 2018 Form IL-1120, Schedule 1299-D.
EXAMPLE 4: Corporation D contributes $5 million to an
approved scholarship granting organization on January 5, 2018. Corporation D
receives a Certificate of Receipt in the amount of $1,333,333 (the maximum
qualified contribution). On October 15, 2019, Corporation D files a 2018 U.S.
Form 1120 and includes $3,666,667 ($5 million less the maximum qualified
contribution) on the charitable contributions line of the return. Corporation D
is entitled to claim an Invest in Kids tax credit in the amount of $1 million
on Corporation D's 2018 Form IL-1120, Schedule 1299-D.
