As most of you know, Georgia has a strange law on the books which allow you to fund a portion of your Georgia Income Tax Liability to a private school scholarship fund. Georgia law provides that up to $50 million per year may be used for this purpose. Historically, most of our clients wait until the end of the year to decide on if they are going to fund this option. For 2011, it appears as if some larger corporations have decide to take advantage of this law and there is a very good chance that the $50 million limit will be reached before the end of the year. We strongly encourage you to fund your contribution earlier this year so you do not miss out.
Here is basically how the tax credit works:
- A taxpayer can re-direct all or a portion of their Georgia income tax payment (based on limits below)to a private school scholarship program and receive an income tax CREDIT against their Georgia income taxes for the amount contributed.
- Annual contribution limit
- Married taxpayers can contribute up to $2,500
- Single taxpayer up to $1,000
- C Corporations can contribute up to 75% of their Georgia Tax Liability
- The credit is limited to your Georgia income tax liability
- Any unused credit can be carried forward for 5 years
- Amount contributed is treated like a charitable contribution for Federal tax purposes
- This will reduce the impact of Alternative Minimum Tax (AMT) if it applies
This is great program and is tax neutral. You fund money to the scholarship fund of your choosing and Georgia treats it as a tax payment.
Remember you need to get approval from Georgia to be able to take the credit. Simply complete the necessary form or call us and we will prepare them for you.