Rachel Canter, executive director of Mississippi First, speaks to Starkville Rotarians at the Country Club Monday. She explained the benefits of pre-K tax credits. Photo by: Luisa Porter/Dispatch Staff
December 12, 2017 10:33:12 AM
Rachel Canter said the Early Learning Collaborative Act of 2013 contains a little-known provision that should encourage anyone to donate to the state's 14 pre-school collaboratives.
Canter, the executive director of Mississippi First, spoke to the Starkville Rotary Club on Monday about state tax credits available for anyone who donates. The collaboratives are state-funded entities that provide early childhood education through a partnership between school districts, Head Start programs and possibly private schools or child care centers, according to the act.
Mississippi First is a nonprofit focused on education reform initiatives in Mississippi.
The tax credits available for donating to collaboratives are unusual, Canter said, because anyone who donates is eligible for a tax credit in the same amount of money they donated.
Tax credits reduce the amount of someone's tax liability, Canter said. So, for example, if someone who earned $50,000 and was taxed at 20 percent, a $2,000 tax credit would reduce their tax liability from $10,000 to $8,000.
Canter said that's different than deductions, which reduces someone's taxable income. If, for example, the same person instead had a $2,000 deduction, their taxable income would be reduced from $50,000 to $48,000, leaving them with $9,600 in tax liability.
The tax credits are a powerful tool for motivating people and businesses to donate to collaboratives, Canter said. They were put into the law when District 52 Rep. Brice Wiggins (R-Pascagoula), who co-sponsored the act, said he wanted a mechanism to help businesses that claimed they wanted pre-K in the state "put their money where their mouths are."
"When the Department of Revenue realized we had done this, their jaws hit the floor because it is pretty remarkable," Canter said. "We got away with it, I would say, because people were so focused on whether or not we should have pre-K at all in the state of Mississippi they did not read the actual bill and they did not notice this was in there."
Donation process and limits
Starkville is home to one of the state's 14 collaboratives, after gaining one last year. Starkville-Oktibbeha Consolidated School District heads the program, under the leadership of Director of Family-Centered Programs Joan Butler. The district has partnered with Head Start for the collaborative, which provides pre-kindergarten education for about 115 students, all age 4, at Emerson Preschool and Oktibbeha County Head Start.
In order to qualify for a tax credit, Canter said, a person or organization needs to donate to the lead partner in a collaborative, which would be SOCSD in Starkville's case. After that, the donor will receive a receipt letter confirming the donation, which must be submitted with the state tax form when filing taxes.
Canter added that, to protect against fraud, the Mississippi Department of Education collects the names of donors from the collaboratives each month and gives them to the Mississippi Department of Revenue at the end of the year.
There are also limits to tax credits.
Canter said the amount of tax credits available is equal to the amount of state appropriations available for pre-K. That means $4 million in tax credits are available for 2017.
"We have never reached the cap," she said. "This law has been in effect since 2013. The first set (of collaboratives) weren't chosen until December 2013, so 2014 was really the first year anyone could claim it."
Individual donations are capped at $1 million -- another limit Canter said has not yet been reached.
The credits are first-come, first-served based on when people file taxes, and Canter encouraged people who get the credit to file taxes as early as possible. She said Mississippi first is working with MDOR to possibly move to pre-certification, which would let the credits apply based on when people donate.
Should tax credits not be available, Canter said, the act includes a provision that allows someone to carry forward tax credits for three years, to continue trying to use them. That also applies for if the tax credits exceed the total amount of a person's tax liability -- the remainder will carry forward to the next three years.
For more information on donation or tax credits, contact Mississippi First 601-398-9008 or the Starkville-Oktibbeha Early Learning Collaborative at 662-615-0033.
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