The IndependentED website explains this new program. The following Q&A is from this website.
Q: What is the ECENC?
A: South Carolina’s ECENC helps students with special needs attend credentialed private schools. Parents can chose either tuition tax credits or grants funded by others’ tax credited donations.
Q: What is a refundable individual income tax credit?
A: A credit, or “payment,” toward an individual’s or family’s South Carolina income tax bill. It can reduce the taxpayer’s liability below zero allowing them to receive a tax refund. If the amount of the credit—up to $10,000 for tuition paid—is larger than the taxes owed, they will receive a refund for the difference.
Q: Who is eligible for the tuition tax credits?
A: Parents or guardians of exceptional needs students, attending eligible schools, can apply for the dollar-for-dollar credits. They can only claim a credit for their actual out of pocket spending on tuition, and there is a $10,000 per student limit. There is also a statewide cap of $4 million in credits, reserved on a first come, first served basis.
Q: How does the process work?
A: First, parents make their payment to an eligible school for an exceptional needs student’s tuition. Then, parents complete and submit a form TC-57A to the South Carolina Department of Revenue. They must save documentation of their child’s eligibility for their own records. Next, DOR confirms the “reservation” of the family’s credit, so long as the statewide $4 million cap hasn’t been met. Finally, when the family completes its state income tax filing the value of the refundable credit is applied.
Schools go through hoops in order to renew eligibility each summer, and BJA’s eligibility is likely to be made official on or by Wednesday, July 29, for the 2015-16 school year.
Parents who are interested may want to evaluate this new program, carefully review the tax form, speak to a tax professional if desired, ensure that they have the needed documentation of their child’s eligibility, potentially pay for their child’s tuition (in part or in full for the 2015-16 school year), and submit the tax form as soon as possible after paying that tuition amount to BJA.
I have been told that the $4 million cap is likely to be met very quickly. Parents may want to immediately look at this credit and determine whether or not they want to pursue it. BJA does not benefit from this—except in having the tuition paid in advance, of course. The benefit is to the parent in receiving all of that money back in the form of a tax credit next spring.
Questions? Please understand that I cannot give tax or legal advice related to this new opportunity. The IndependentED website has much helpful information, including a student eligibility presentation and a link to the tax form. Of course, please do let me know if you have questions that I may be able to answer.