Please see this example from Scholarship for Kids of how this donation can be a business expense AND a state tax credit:
HERE ARE THE 4 STEPS TO RESERVING YOUR CREDIT AND MAKING THE PAYMENTS:
- Create an account at myalabamataxes.alabama.gov if you don’t already have an account.
- Reserve your desired credit amount on your My Alabama Taxes account. It is important to note that there is an annual limit of $40,000,000 on the total amount available for reserve. In other words, the credit could potentially “run out” if you wait to reserve your credit.
- Once you have reserved your credit, you or your company can contribute to the Scholarship Granting Organization of your choice. For a list of approved organizations visit this link.
- Keep your receipt of donation from that organization for tax return preparation purposes to give to your accountant and to keep for your records.
For further guidance on steps 1 and 2, visit this link.