Pre-K Tax Credit
Investing in Pre-K
When children start school without important skills, it becomes harder and harder for them to achieve their potential without considerable intervention. These challenges can often lead children to face more severe issues, such as being retained in a grade, experiencing discipline troubles, and failing to finish high school. Mississippi must help families get their children ready to succeed in school. For the first time in Oxford and Lafayette County, the L.O.U. Early Childhood Learning Collaborative can accept your donations that are mutually beneficial to our community and you, the donor.
Cost of Providing Quality Pre-K
Providing pre-k services to four-year-old children costs $5,000 per child enrolled in full-day programs and $2,500 per child enrolled in half-day programs. The State of Mississippi provides half of these costs--$2,500 per child enrolled in full-day pre-k and $1,250 per child enrolled in half-day pre-k.
The State Tax Credit (MS)
Individuals or Corporations who make a contribution to support the L.O.U. Early Learning Collaborative will be eligible to receive a state tax credit for the donated amount up to $1,000,000, approved by The Mississippi Department of Revenue.
► Is there a limit on how much of a tax credit I can claim?
You can donate an unlimited amount to a collaborative or specific provider; however, any individual or organization can only receive a credit of up to $1,000,000.00 in a single year.
► What is the total amount of credits available for this year?
The Mississippi Department of Revenue can approve 1:1 tax credits up to the amount the legislature appropriates to the Early Learning Collaborative Act each year. For fiscal year of 2021, the legislature appropriated $7.24 million; therefore, the sum of the donations in this calendar year eligible for the tax credit may not exceed $7.24 million.
► As an individual, if I have too much money withheld from my income and I make a qualifying donation in order to claim the tax credit, how much money will I get in a refund?
A tax credit reduces the amount of taxes that a person owes. The Department of Revenue (DOR) will first calculate the amount of taxes you owe based on your income. This is called your tax liability. DOR will subtract from your tax liability any tax credits you can claim. Then, your withholdings (money that you had withheld for taxes from your paycheck each pay period), if any, will be applied to the amount of remaining tax liability after subtracting your tax credits. If you have had more taxes withheld from your paycheck than your remaining tax liability after subtracting your tax credits, you will qualify for a refund for the amount of withholdings that you overpaid. For example, let’s assume that you earned $50,000 in taxable income in a year, and you are required to pay 20% in taxes, or $10,000. (In other words, your tax liability is $10,000.) During the tax year, you also made a qualifying donation of $2,000 to your local collaborative. This donation means you can claim a $2,000 tax credit, which will reduce your tax liability to only $8,000.
► How do I make a qualifying donation to the L.O.U Early Learning Collaborative?
Our L.O.U Early Learning Collaborative welcomes monetary donations for the tax credit; however, you may also donate in-kind resources, such as goods or services. Contact Cara Buffington, Director of Early Childhood Reading Development, first to see if the goods or services will be accepted. Once you have made a donation, the Mississippi Department of Education (MDE) will issue you a donation certificate to allow you to claim the tax credit when you file your taxes.
*The L.O.U. Early Learning Collaborative is required to adhere to state regulations requiring that they meet nationally recognized standards of quality.