The state of Georgia allows taxpayers to contribute to approved student scholarship organizations while reducing their Georgia tax liability for the money contributed to these organizations. The money contributed is used to provide financial aid to primary or secondary public school students to attend a private school. Young children who are enrolling in pre-kindergarten, kindergarten, or first grade also qualify. This is an excellent way of helping families who would like an option to public school but can’t afford a private school. This is also a good way of supporting your own kids’ or grandchildren’s private school.
What is the Tax Benefit?
- A dollar for dollar tax credit to offset your Georgia income tax liability.
- A deduction for charitable contributions on your federal tax return.
What is the Maximum Tax Credit Allowed?
- A single taxpayer: $1,000
- Married filing jointly: $2,500
- S Corporation shareholder, LLC member, or partner in Partnership: $10,000 for each owner (limited to 6% of their share of pass-through Georgia income).
- C Corporation or Fiduciary: 75% of the Georgia income tax liability for the tax year.
What is the Application and Donation Process?
a) Before January 1, contact the private school you wish to make the donation to and they will provide you with the name of their approved student scholarship organization, give you further instructions on how to apply, or help you with “pre-registration”.
b) To submit your own application go to Georgia Tax Center (GTC) at https://gtc.dor.ga.gov to login to your account. If you have never filed a return with the State of Georgia you must call the taxpayer Services Call Center at 1-877-423-6711 to get registered. You will need your Social Security Number or Taxpayer ID Number, your email address, and your Federal Adjusted Gross Income reported on your most current tax return for the past 2 years. Submit your application on January 1, 2016.
c) Receive a pre-approval letter in the mail or access this letter within the GTC.
d) Within 60 days of receiving the pre-approval letter, issue payment for the contribution along with a copy of the approval letter to the Qualified Student Scholarship Organization.
e) Receive Form IT-QEE-SS01 acknowledging your contribution.
f) Report the contribution both as a tax credit on your Georgia income tax return and also as an itemized deduction on your federal income tax return. Note that the federal donation must be added back to Georgia adjusted gross income prior to claiming the credit on the Georgia income tax return.
Important to Know:
The State of Georgia has a credit cap of $58,000,000 for the 2016 Education Expense Credit. This credit cap was reached the very first day of applications for 2015 on January 1, 2015 and the same is expected to happen again for 2016. The applications submitted on January 1, 2016 will be prorated down to the $58,000,000 credit cap. Any tax credit claimed but not used on the 2016 return can be carried forward for 5 years.
Please contact us if you have any questions or if we can assist you in any way:
Allen & Company, PC
1350 Wooten Lake Road, Suite 206
Kennesaw, GA 30144
Allen & Company, PC - a CPA firm serving Kennesaw, Marietta, Acworth, Woodstock and north Atlanta. Providing accounting, financial statement audit, taxation, and advisory services for individuals and businesses. Extensive experience working with franchised quick service restaurants and other franchised businesses.