As many of us anxiously await potential changes in our tax laws and the dawn of a new year, there are many questions regarding how to give back to our community during the upcoming return period.

Bridgeworth Financial has come up with a solution by providing insight on how to help provide for underprivileged children in the Huntsville-Madison County community and the state of Alabama as a whole.

As part of the Alabama Accountability Act, the state of Alabama sets aside up to $30 million each year for Scholarship Granting Organizations (SGOs) – allowing Alabama taxpayers to redirect up to 50% of their state tax liability to an SGO.

By redirecting your tax dollars for education in our local area, funds go directly to kids and schools in need instead of the Alabama Department of Revenue.

In short, an SGO provides K-12 scholarships to pay tuition for qualifying low-income students so eligible families in Alabama have the opportunity to choose the education that best fits their child’s education needs.

Approved Organizations

As a resident of Huntsville and Madison County, Rocket City SGO is the choice for many in our area. Scholarships for Kids is another notable option and one of several worthy organizations approved and located in the Jefferson County area.

The websites for both these organizations help explain the programs in more detail. No matter what part of the state you reside in, you can contribute to any on the approved list if you are an Alabama taxpayer.

Here is a list of Approved Scholarship Granting Organizations in Alabama.

Next Steps

If you are interested in taking advantage of this opportunity, follow these main steps below:

Go to the Alabama Department of Revenue website and set up a My Alabama Taxes (MAT) account.
Once you log in, go to “Report a donation to an SGO.”
After completing your personal information, choose the SGO of your choice from the menu titled “SGO Name.”
Fill in your donation’s desired amount, up to 50% of your estimated state tax liability.
Mail your check, made payable to your selected SGO, to the address listed on their website or from the approved list previously referenced.
You will immediately receive a confirmation number, so keep that for your tax records until you receive a letter or email with further confirmation of your donation.

Important Reminders

When it’s time to file your taxes, you will have an Alabama state tax credit in the amount of your donation.

This results in an increase in any refund you are due or a potential reduction of any amount owed. It is critical to estimate 50% of your Alabama tax liability to base your contribution amount.

However, suppose you were to contribute more than 50% of your actual Alabama tax liability and cannot use the total amount under current law. In that case, you should be able to carry forward the excess portion and use it next year.

For further questions, please contact a Scholarship Granting Organization in your area or reach out to a Bridgeworth advisor at https://bridgeworthfinancial.com/

Bridgeworth Wealth Management is a registered investment adviser.

This content does not constitute legal, tax, accounting, financial, or investment advice. You are encouraged to consult with competent legal, tax, accounting, financial, or investment professionals based on your specific circumstances. We do not make any warranties as to the accuracy or completeness of this information, do not endorse any third-party companies, products, or services described here, and take no liability for your use of this information.