A new tax credit for donations to public education will be available beginning in January for Georgia taxpayers, but the credit is limited so it’s best to act soon.
Beginning Jan. 1, 2018, and running through Dec. 31, 2020, the state of Georgia is offering a nonrefundable Georgia income tax credit for donations specifically to the Public Education Innovation Fund Foundation, which awards grants to public schools in the state.
The credits are limited, as follows:
- $1,000 maximum per individual (if filing single);
- $1,250 if filing married filing separate;
- $2,500 if filing married filing jointly; and
- $10,000 per member or partner from a Georgia S-Corporation or partnership; however, the tax credit shall be allowed only for the Georgia income on which such tax was actually paid by the individual. Also, if the individual is a member, partner or shareholder in more than one pass-through entity, the total credit allowed cannot exceed $10,000. The individual taxpayer decides which pass-through entities to include when computing Georgia income for purposes of the qualified education donation credit. The combined Georgia income from the selected pass through entities is multiplied by 6 percent to determine the tax that was actually paid.
Furthermore, only $5 million in total credits under this program will be awarded each year, so it is important to act quickly if you think you will want to take advantage of this option. The qualified education donation tax credit will be allowed on a first-come, first-served basis.
In order to apply, you must complete a preapproval application online through the Georgia Tax Center. Within 30 days the Georgia Department of Revenue will notify you and the Public Education Innovation Fund Foundation of the contribution amount, the tax credits preapproved and allocated to you, and a tax credit certificate number.
You will then have 60 days from the date when you receive the preapproval notice and within the same calendar year to make the contribution. Note, however, that the tax credit will not be allowed if you directly or indirectly designate the donation for any school or program attended by any of your children.
You will then receive a letter of confirmation within 15 days that the contribution was received.
To claim the tax credit, you must submit Form IT-QED-TP2 with your Georgia tax return. Any credit claimed but not used in a taxable year generally can be carried forward for five years.
As always, please let us know if you have any questions.