, There has been an update to the rules around taking ESA funds and tax credit funds in the 23/24 school year. Rule Clarification as of 10/24/23: The Dept of Education had previously stated that a student could not take tax credit funds and ESA funds in the same academic year. The rule change now states that if a parent closes a child's ESA contract during the school year, the child may accept tax credit scholarship funds for the remainder of the school year. Tax credit funding may begin the quarter following the ESA contract cancellation. When parents cancel their child’s ESA program, they receive an email indicating the ESA account is closed. This email must be provided to Arizona Tuition Connection for verification prior to us being able to award any Tax Credit Funding to the school
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Example: A parent cancels their student's ESA contract in November of 2023 (Quarter 2). Once the parent provides the cancellation email to Arizona Tuition Connection, that student can receive tax credit scholarships beginning in January of 2024, for quarters 3 and 4 of the school year. How does this affect you? - If your kids currently are not participating in the ESA program for the 23/24 school year, then there is nothing for you to do differently. Continue down the path you are on.
- If you have accepted ESA for the 23/24 school year, and you recently had
more than $4,000 in tax credit donations recommended to your family, you may consider cancelling your ESA contract and accepting tax credit scholarships for the 2nd half of the 23/24 school year.
Please
note: - Once cancelled, parents will not be eligible to sign another ESA contract for their child until July 1 of the next Academic year. There is no switching back and forth between ESA and tax credits in the same academic year.
- ESA is awarded out in quarters. If you take ESA funding for the first two quarters, (½ the academic year) you can only receive tax credit funding equal to ½ the tuition in the remaining two quarters. For example, if your tuition is $16,000 a year, and you cancel your ESA contract in November, you will have received two quarters of payments from ESA ($3,500), and potentially can receive up to $8,000 in tax credit scholarships for the last two quarters of
the academic year.
- Even though there has been a Department of Education rule change, some schools may require you to stay with ESA or tax credits for the entire school year. You should be very clear on your school’s policy prior to cancelling any ESA contract.
- It is the parent’s responsibility not to violate these rules. If you are planning on making a change due to this ruling, please keep both Arizona Tuition Connection and your school updated on your intentions.
Most important point: NEVER STOP GETTING TAX CREDIT DONATIONS WHERE YOUR FAMILY IS RECOMMENDED TO RECEIVE THOSE FUNDS!
Have questions or want more information: Please attend one of our coaching sessions to learn more. Join us tonight, October 25th at 5:30 PM ZOOM - ESA/Scholarship Coaching
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