State of Alaska

                                

Alaska’s Education Tax Credit Program

Information and Documents

Creating Opportunities for Alaska's Children

 

Alaska's Education Tax Credit program was first established in 1987 by the Legislature to encourage private businesses to make charitable contributions to support schools in Alaska.  Due to the adoption of House Bill 278, the list of those eligible to receive cash donations from private business has been expanded.  There are now many more opportunities for private business to give cash donations to fund educational facilities and programs for Alaska's next generation. In return, the businesses receive credits to offset taxes due for the Alaska Net Income Tax (Corporate), Mining License Tax, Fisheries Business Tax, Fishery Resource Landing Tax, Oil and Gas Production Tax, Oil and Gas Property Tax and Insurance Tax.  The Education Tax Credit program is a win-win for the children and businesses in Alaska.


Frequently Asked Questions:

What organizations are eligible to receive cash contributions to be spent on expenditures that will qualify for the Education Credit?

In general, the following organizations/programs (subject to statutory qualifications) are eligible to receive cash contributions to be spent on certain expenditures that will qualify for the Education Credit:

·          Nonprofit organization

·          Nonprofit, public or private, accredited Alaska two-year or four-year colleges

·          AK public and private nonprofit elementary or secondary schools and school districts

·          State-operated vocational technical education and training schools

·          Nonprofit regional vocational training centers

·          An apprenticeship program

·          A coastal ecosystem learning center

·          The Alaska higher education investment fund

·          A postsecondary institution in the state providing dual-credit courses

·          A residential school in the state

·          Tribal entity

·          Department of Education and Early Development

 

Is there limit to the amount of cash that can be given to qualifying organizations during the tax year and how is this limit calculated?

A taxpayer is allowed a credit against the Alaska Net Income Tax (Corporate Tax), Mining License Tax, Fisheries Business Tax, Fishery Resource Landing Tax, Oil and Gas Production Tax, Oil and Gas Property Tax and Insurance Tax due for cash contributions to qualifying organizations/programs and spent on qualifying expenditures and limited to:

·          50% of the first $100,000

·          100% of the next $200,000

·          50% of the amount that exceeds $300,000

·         Maximum combined credit for Alaska Net Income Tax, Mining License Tax, Fisheries Business Tax, Fishery Resource Landing Tax, Oil and Gas Production Tax, Oil and Gas Property Tax and Insurance Tax is $5,000,000

·         In addition, if the taxpayer is a member of a consolidated group, that combined group is also limited to $5,000,000 in Education Tax Credit per tax year  

 

Is the Education Tax Credit a refundable credit?

The Education Tax Credit cannot be refunded. It can only be used to reduce the amount of tax payable to the State of Alaska for the Alaska Net Income Tax (Corporate Tax), Mining License Tax, Fisheries Business Tax, Fishery Resource Landing Tax, Oil and Gas Production Tax, Oil and Gas Property Tax or Insurance Tax.  Per statute, any unused portion of the credit not used for a tax year may not be sold, traded, transferred, or applied in a subsequent tax year.

 

Can the Education Tax Credit be transferred to another person or entity?

The Education Tax Credit cannot be transferred to another person or entity.  Per statute, any unused portion of the credit not used for a tax year may not be sold, traded, transferred, or applied in a subsequent tax year.

 

When was the Education Tax Credit first established?

The Education Tax Credit was first established in 1987 and was intended to encourage private businesses to make charitable contributions to support schools in the state.

 

Can the Education Tax Credit be claimed against municipal or federal taxes?

The Education Tax Credit may only be claimed against State of Alaska taxes, not municipal or federal taxes.

 

Where can I find the statutes that apply to the Education Tax Credit?

The statutes are available through the Legislature’s website www.legis.state.ak.us.  Look for the link “infobases” or call your legislator’s office for assistance.  See the answer to “Which type of taxes can be reduced by the Education Credit?” for specific statutes.

 

Which type of taxes can be reduced by the Education Tax Credit?

The Education Tax Credit can generally* be used to reduce the amount of tax payable to the State of Alaska for:

·         Alaska Net Income Tax (Corporate Tax) (AS 43.20.014(a))

·         Mining License Tax (AS 43.65.018(a))

·         Fisheries Business Tax (AS 43.75.018(a))

·         Fishery Resource Landing Tax (AS 43.77.045(a))

·         Oil and Gas Production Tax (AS 43.55.019(a))

·         Oil and Gas Property Tax (AS 43.56.018(a))

·         Insurance Tax (AS 43.21.96.070(a)

*Please check the statutes for the specific tax type for specific limitations on expenditures limitations that qualify for the Education Tax Credit.  Eligible organizations and programs may vary by tax type.

 

When will the Education Tax Credit sunset or no longer be available as a credit?

With the passage of HB 306, the Education Tax Credit for all tax types will no longer be available after 12/31/2018.

 

What is the definition of a "nonprofit organization"?

A nonprofit organization defined by AS 43.20.014(f)(4), AS 43.65.018(f)(4), AS 43.75.018(f)(4) and AS 43.77.045(f)(4) means a charitable or educational organization in the state that is exempt from taxation under 26 U.S.C. 501(c)(3) (Internal Revenue Code).

 

Is it the donor’s responsibility to obtain and retain proper documentation to verify that the cash contribution was given to a qualifying organization/agency and that the donated money went to qualifying expenditures?

It is the taxpayer’s responsibility to obtain enough support to verify that both the recipient and the expenditure qualify under the Education Credit statutes.  Education tax credits will be audited by the state.

 

When does a taxpayer need to donate during the year?

A taxpayer can make a cash contribution any time during the tax year. 

 

If I give a cash contribution to a qualified nonprofit organization, what types of expenditures qualify for the Education Credit?

The qualified nonprofit organization or agency must use the cash contribution for at least one of the following:

·         Direct instruction

·         Research

·         Education support purposes (includes library and museum acquisitions and contributions to endowment by an Alaska university foundation)

·         The operation of an organization dedicated to providing education opportunities the promote the legacy of public service contributions to the state and perpetuate ongoing educational programs that foster public service leadership for future generations of residents of the state

·         Science, technology, engineering, and math programs (STEM) for staff and for students in grades K – 12

·         Providing Alaska Native cultural or heritage programs and education support (including mentoring and tutoring) for public school staff and for students who are in grades K-12

 

If I give a cash contribution to a public or private Alaska two-year or four-year college accredited by a regional accreditation association, what types of expenditures qualify for the Education Credit?

The public or private Alaska two-year or four-year college must use the cash contribution for at least one of the following:

·         Direct instruction

·         Research

·         Education support purposes (includes library and museum acquisitions and contributions to endowment by an Alaska university foundation)

·         Facility

·         An annual intercollegiate sports tournament

 

If I give a cash contribution to a public or private nonprofit elementary or secondary school in the state, what types of expenditures qualify for the Education Credit?

The public or private nonprofit elementary or secondary school in the state must use the cash contribution for at least one of the following:

·         Direct instruction

·         Research

·         Education support purposes (includes library and museum acquisitions and contributions to endowment by an Alaska university foundation)

·         Facility

 

If I give a cash contribution to a school district in the state, what types of expenditures qualify for the Education Credit?

The school district in the state must use the cash contribution for at least one of the following:

·         Secondary school level vocational education courses, programs and facilities

·         Childhood early learning and development programs

·         Educational support to childhood early learning and development programs

 

If I give a cash contribution to a nonprofit regional training center recognized by the Department of Labor and Workforce Development in the state, what types of expenditures qualify for the Education Credit?

The regional training center must use the cash contribution for the following:

·         Vocation education courses, programs, equipment, and facilities

 

If I give a cash contribution to a state-operated technical education and training in the state that offers programs approved by the United States Department of Veterans Affairs and the Alaska Commission on Postsecondary Education, what types of expenditures qualify for the Education Credit?

The programs must use the cash contribution for the following:

·         Vocation education courses, programs, equipment, and facilities

 

If I give a cash contribution to an apprenticeship program in the state that is registered with the United States Department of Labor under 29 U.S.C. 50 – 50b (National Apprentice Act) , what types of expenditures qualify for the Education Credit?

The apprentice program must use the cash contribution for the following:

·         Vocation education courses, programs, equipment, and facilities

 

If I give a cash contribution to a coastal ecosystem learning center under the Coastal American Partnership established by the federal government, what types of expenditures qualify for the Education Credit?

The coastal ecosystem learning center must use the cash contribution for the following:

·         Education

·         Research

·         Rehabilitation

·         Facilities

 

Can a company, agency or organization give a cash contribution to the Alaska higher education investment fund under AS 37.14.750?

Yes, as long as the cash contribution is going to the Alaska higher education investment fund established under AS 37.14.750.

 

If a nonprofit organization sets up a scholarship to defray the cost of dual-credit courses, where can the recipient student use this scholarship money and what type of expenses qualify for the Education Credit?

The scholarship funds must be paid to a postsecondary institution in the state that provides dual-credit courses or a residential school approved by the Department of Education and Early Development under AS 14.16.200 and must be for the following expenses:

·         Tuition

·         Textbook

·         Registration

·         Course and programmatic student fees

·         On-campus room and board

·         Transportation costs to and from a residential school

·         Other related educational and programmatic costs

 

If I give a cash contribution to a residential school in the state approved by the Department of Education and Early Development under AS 14.16.200, what types of expenditures qualify for the Education Credit?

The residential school must use the cash contribution for at least one of the following:

·         Constructing a residential housing facility

·         Operating a residential housing facility

·         Maintaining a residential housing facility

 

If I give a cash contribution to a tribal entity, what types of expenditures qualify for the Education Credit?

The tribal entity must use the cash contribution for at least one of the following:

·         Childhood early learning and development programs

·         Educational support to childhood early learning and developments

 

If I give a cash contribution to a nonprofit corporation organized under AS 10.20, what types of expenditures qualify for the Education Credit?

The corporation must use the cash contribution for at least one of the following:

·         Childhood early learning and development programs

·         Educational support to childhood early learning and developments

 

If I give a cash contribution to the Department of Education and Early Development, what types of expenditures qualify for the Education Credit?

The Department of Education and Early Development must use the cash contribution for at least one of the following:

·         Childhood early learning and development programs

·         Educational support to childhood early learning and developments

 

Informative Documents and Presentations

Date: Document Title: Presented To: Author/Organization:
July 10, 2014 
Creating Opportunity for Alaska's Children

Public

Michael Pawlowski, DOR