‘School choice’ also means ‘tax choice’ in Alabama

It’s back-to-school season and for some parents, this is a happy time.

But for those whose children are stuck in underperforming schools, or schools where they are bullied or are in danger, this is a heartbreaking time, especially if they cannot afford to move or go to private school.

“There was fighting every day. People wanted to shoot me, kill me, and everything,” said Calvin Coleman in a speech about his experiences at his Mobile public high school.

Did you know that you, or your company, can help students like Calvin by donating a portion of what you already owe in state income taxes to a program that funds scholarships for low-income families in Alabama?

“When my son Carlos was in the fifth grade, he was constantly bullied and I wanted to desperately put him into a private school,” wrote Nyenya Webster of Montgomery in Alabama Daily News. Every day was a struggle, she added. “I was at a loss as to what to do to help my son.”

Then Webster learned about the tax-credit scholarship program created in 2013 by the Alabama Accountability Act that serves roughly 4,000 low-income, mostly minority Alabama students.

She applied, and Carlos received a scholarship to attend Success Unlimited Academy in Montgomery.

“Success Unlimited has been a lifesaver for my son,” Webster wrote. “He … is now considering college. My son never talked about going to college before Success.”

For those who want to help other Alabama families break the cycle of poverty through education, it’s a no-brainer.

“For a donor, it doesn’t cost them anything,” said Warren Callaway, executive director of Scholarships For Kids, one of the scholarship granting organizations funded by the program.

That’s because a tax credit is different from a charitable contribution. When you make a charitable contribution to a non-profit organization, you deduct a portion of that on your income tax. However, a tax credit allows you to take a dollar for dollar reduction in your state income tax.

“Basically, donors are redirecting some of their state income tax liability to a [scholarship granting organization],” Callaway said. “So, if you give $100 to us, you can reduce your state income tax by $100.”

Who benefits from the donation?

“The average household income for these students is under $30,000 so these are families that would have no other way of choosing the school that is best for their child,” said Ryan Cantrell, director of state strategy and political affairs for the American Federation for Children, during an interview of the 1819 podcast.

Higher-income families have always had school choice, Cantrell said, but “it’s the low-income families who get stuck with no options in under-performing schools or schools that don’t work for their child.”

There are $30 million in tax credits available and, so far, only about a third have been claimed, according to the Department of Revenue’s My Alabama Taxes website.

Here’s how you can reserve your tax credit before the December 31, 2019, deadline:

Step 1: Estimate how much income tax you or your business will owe Alabama next year by checking how much you paid last year. Individuals and corporations can donate up to 50 percent of their tax bill, and while individuals are limited to $50,000, corporations are unlimited.

Step 2: Visit the My Alabama Taxes website and follow instructions for reserving an Alabama Accountability Act tax credit.

Step 3: Send a check to one of the seven scholarship granting organizations in Alabama within 30 days.

Step 4: When you do your taxes next year, fill out an Alabama Department of Revenue Schedule AATC form to reduce your income tax bill by the amount you donated.

For more help, individuals may call the Alabama Department of Revenue at 334-353-0602 or 334-353-9770, and corporations may call 334-242-1200.

You’re already going to have to write a check for your state income taxes. Why not control where some of that money goes, especially when it has the power to change lives?

“It was a relief that nobody would understand,” said mother-of-five Alleane West in an Alabama Opportunity Scholarship video about the program’s impact on her family. “You know, you’re a single mom with boys trying to not make them a statistic.”

Watch:

Rachel Blackmon Bryars is a senior fellow at the Alabama Policy Institute. Connect with her at [email protected] or on Instagram @RachelBlackmonBryars.