Most taxpayers understand the significance of deductions and credits in reducing or offsetting their tax liability. However, Georgia provides a few unique tax credits that redirect your tax funds toward specific causes or organizations.
In general, state taxes contribute to public schools, infrastructure maintenance, Medicaid, healthcare for low-income families, and more. Georgia offers various tax credit opportunities that enable you to channel your state income tax liability as a direct contribution to numerous organizations and foundations serving state residents. Specifically, these credits allow you to keep your funds local by supporting a local organization or directing them to a city with the greatest need. Examples include the Qualified Education Expense Tax Credits, Qualified Foster Child Donation Credit, Qualified Law Enforcement Donation Credit, and Rural Hospital Organization Expense Credit, which are accessible to both individual and business taxpayers.
Moreover, through each of these credits, you can narrow down your support to specific local organizations. For instance, using the Qualified Education Expense Tax Credits, you can support the private college-preparatory Walker School in Marietta or Gracepoint School, a private institution catering to dyslexic learners. Similarly, with the Qualified Law Enforcement Donation Credit, you can back the Kennesaw Public Safety Foundation or the Atlanta Police Foundation. The Rural Hospital Organization Credit allows you to aid one of the 55 rural hospitals across the state.
The essence of these credits lies in making a pre-approved contribution to an organization, either within a capped amount or up to your Georgia state income tax liability. In return, taxpayers receive a dollar-for-dollar reduction in their state tax liability. Notably, you still pay the same amount. Instead of paying the Georgia Department of Revenue your $1,000 tax liability, you contribute $1,000 to a qualified police foundation. They empower you to direct your tax dollars to specific organizations and causes that hold significance to you. If you donate more than your tax liability, you can carry the unused tax credit forward for up to five years. Pass-through businesses should collaborate closely with their tax advisers or CPAs, as they may be eligible for a state tax credit and federal deduction.
Each tax credit is subject to an annual cap; therefore, taxpayers must apply for approval before making a contribution, a process done through the Georgia Tax Center website. The Georgia Department of Revenue grants approvals on a first-come, first-served basis and generally will notify you of your approval within 30 days. Once approved, you have 60 days from the approval date to make a payment to the selected organization. The receiving organization will provide a form acknowledging the donation, which serves as documentation when filing your state return.
For most available tax credits, there are dollar limitations during the first six months of the year. After June 30, if any tax credits remain available, approved taxpayers can make unlimited contributions to qualified organizations in exchange for a corresponding 100% Georgia income tax credit. Given their popularity, many credits accept applications up to a year in advance.
We’ve always maintained that taxes are typically inevitable, but through these specialized programs, taxpayers can support institutions engaged in meaningful community contributions.
If you have questions regarding the available Georgia tax credits, the experts at Henssler Financial will be glad to help:
- Experts Request Form
- Email: experts@henssler.com
- Phone: 770-429-9166
Listen to the November 4, 2023 “Henssler Money Talks” episode.
This article is for demonstrative and academic purposes and is meant to provide valuable background information on particular investments, NOT a recommendation to buy. The investments referenced within this article may currently be traded by Henssler Financial. All material presented is compiled from sources believed to be reliable and current, but accuracy cannot be guaranteed. The contents are intended for general information purposes only. Information provided should not be the sole basis in making any decisions and is not intended to replace the advice of a qualified professional, such as a tax consultant, insurance adviser or attorney. Although this material is designed to provide accurate and authoritative information with respect to the subject matter, it may not apply in all situations. Readers are urged to consult with their adviser concerning specific situations and questions. This is not to be construed as an offer to buy or sell any financial instruments. It is not our intention to state, indicate or imply in any manner that current or past results are indicative of future profitability or expectations. As with all investments, there are associated inherent risks. Please obtain and review all financial material carefully before investing. Henssler is not licensed to offer or sell insurance products, and this overview is not to be construed as an offer to purchase any insurance products.
