Educational Tax Credits (ETC)
CNMI Public Law 10-328 grants a non-refundable tax credit up to $5000.00, anually. per tax payer for contributions made to qualifying educational institutions, such as Isla Montessori School. Taxpayers may be individuals or businesses. The ETC can be used to offset wage and salary tax, business gross revenue tax and earnings tax.
ETC is superior in 2 ways:
1. The credit is available to all individual tax payers, whether they itemize or not, AND
2. A tax credit provides a dollar for dollar tax benefit, whereas, a deduction provides less than a dollar for dollar tax benefit.
Please note that individual taxpayer can deduct contributions only as an itemized deduction. This limits the benefits to those individual taxpayers who itemize. Taxpayers who do not itemize do not get any tax benefit from making contributions.
How to Make Your ETC Contribution
1. Determine now much Business Gross Receipts (BGRT) your business will pay during the current month.
2. If your monthly BGRT is $5,000.00 or more, you can give up to a maximum of $5,000.00 in any one year and credit this against your monthly taxes due. If your monthly BGRT is less than $5,000.00, determine how much you wish to give to Isla Montessori School, up to the limit of the BGRT amount due.
3. Make checks payable to Isla Montessori School. The check must be dated on or before the end of the month to be credited during that month. Isla Montessori School will issue you a receipt for the amount that you contributed.
4. Insert in Part II. AMOUNT DUE SUMMARY of your Monthly Gross Business Receipts tax return the amount of the educational contribution you are making to Isla Montessori School.
5. Fill out the ETC Schedule in your BGRT monthly return (Schedule ETC). Attach a copy of Isla Montessori School's receipt to your return.