The Alabama Department of Postsecondary Education’s career-technical dual enrollment program has released its Alabama Future Workforce Initiative Tax Credit Donation Form. Donations will provide eligible high school students an opportunity to enroll in college-level career and technical education courses. Tax credits are available for certain donations beginning Jan. 1, 2015, under the Alabama Future Workforce Initiative Act passed in 2014 by the Legislature.
This allows businesses to donate money for scholarships and receive up to a 50 percent tax credit for the donations. Donors can direct up to 80 percent of contributions to a specific career technical program at a particular institution.
The dual enrollment program allows eligible students in grades 10 through 12 to take college classes and receive both high school and college credit.
Career-Technical Dual Enrollment Tax Credit FAQs
What does my donation support?
Contributions to the Career-Technical Dual Enrollment Program help pay for student scholarships (tuition, fees, books, materials and supplies) for eligible high school students to enroll in college-level career-technical Education courses at Alabama community colleges.
How much can I donate?
Donations of any amount may be contributed. However, limitations apply to the tax credit that can be claimed. The tax credit can be claimed by a taxpayer in an amount equal to 50 percent of the total contribution made to the Department of Postsecondary Education during the taxable year for which the credit is claimed. Such credit may not exceed an amount greater than 50 percent of the taxpayer’s total Alabama income tax liability, and in no case more than $500,000 for any given tax year. A taxpayer may carry forward all or part of a tax credit granted to the taxpayer for a period of up to three years.
Who can donate?
Anyone can donate, although, only taxpayers filing Alabama state income tax returns (and who are not a dependent of another taxpayer) can receive the tax credit. A taxpayer is defined as an individual, a married couple filing jointly (regardless of whether or not they have children in school), a limited liability company, a corporation, or any other business entity lawfully organized and created under the laws of Alabama or other state.
What is the difference between a tax credit and tax deduction?
A tax credit is a dollar-for-dollar reduction in the actual tax liability or tax owed. A tax deduction only reduces total taxable income from which the taxes owed are calculated. The tax credit is taken at the time the Alabama income tax form is filed.
What’s the difference in funds that I have been donating to schools for years and this initiative?
Contributions to schools have been tax deductible for many years. A tax deduction allows you to subtract the amount of a contribution from the amount of your taxable income. The Alabama Future Workforce Initiative (AFWI) (Career-Technical Dual Enrollment Tax Credit Program) allows for a tax credit, which is subtracted from the amount of state income taxes you owe.
Can I choose which college or program of study should benefit?
Yes, provided that your institution of choice currently has or is in the process of expanding its dual enrollment program to include the designated career-technical program(s). You can designate up to 80 percent of the contribution to career-technical program(s). The designation must be made at the time of donation.
Are all Alabama Community College System institutions participating?
All Alabama public community and technical colleges, with the exception of Ingram State Technical College, Marion Military Institute and Alabama Technology Network, are eligible to participate and offer various career-technical programs of study.
Are all Alabama high schools participating?
All Alabama public high schools are eligible to participate, as well as those private high schools that meet or exceed the Alabama State Department of Education approved minimum high school standards. For eligibility questions pertaining to home-schooled students, contact the Dual Enrollment Coordinator.
Does my contribution provide scholarships to both public and private high school students?
Yes. Students who meet the eligibility requirements established by the State Board of Education may participate.
For tax filing purposes, what documentation will I receive as proof of my contribution?
Once you have made your contribution, a receipt will be provided to you by the Alabama Community College System for tax filing purposes. You may indicate on the donation form whether you prefer to have the receipt mailed to you or sent to you electronically. Notification of your contribution will be electronically submitted to the Alabama Department of Revenue by the Alabama Community College System. At tax filing time, you should provide a copy of the receipt to your tax preparer and maintain a copy for your records.
When can I begin contributing?
Contributions that qualify for a tax credit under this program may be made for tax years beginning on Jan. 1, 2015, and thereafter. You can complete the attached form and submit your donation electronically or you can fill in the Tax Credit Donation Form and write a check made payable to: The Alabama Community College System. If you choose to write a check, mail the form and your check to the address shown on the form. The donation must be postmarked no later than the last day of the tax year that applies to the donor to take advantage of the tax credit for that tax year.
Can I also claim a state and/or federal income tax deduction for my contribution?
You cannot claim a State of Alabama income tax deduction for the same donation used to calculate your Alabama tax credit. You should contact your tax advisor for more information regarding the eligibility of your donation for a federal income tax deduction.