Georgia Student Scholarship Tax Credit Program

As I finished estimating our tax return recently, I hollered into the living room and told my wife that we are getting a little money back from the federal government and we owe a little more to the state. She asked/yelled, “How can we owe more money? We have been paying all year long!” It left me wondering how we could have somehow mitigated our tax liability during the year. Then I remembered that during audit fieldwork in 2009, some of our private school clients told me about a scholarship program they have been promoting which gives taxpayers a unique tax advantage while helping students at the same time.

This program is the Georgia Student Scholarship Tax Credit Program. A couple of years ago, a Georgia law was passed which permitted taxpayers, both individuals and corporations, to receive state tax credits for amounts contributed to certain scholarship organizations. The scholarships are for qualifying students currently in public education who wish to attend private school. As this program continues to grow, this tax incentive should help private schools with enrollment figures and also help with the overcrowding of the public school systems.

This is a refundable state tax credit and is limited to the amount contributed or $1,000 for a single taxpayer and $2,500 for married taxpayers who file jointly. After crunching all of the numbers for all of the different tax situations taxpayers could be in, it was determined that taxpayers who itemize will receive a 94% tax benefit from making the contribution. If you are in an alternative minimum tax situation, you could receive a tax benefit of 129% for making the contribution.

Corporations wishing to utilize the credit are limited to the amount contributed or 75% of the state tax liability. This would result in a tax benefit for the corporation ranging from 96%-99%.

So when you are wondering if there is a way to help minimize your tax liability, remember this program. To read more information about the Georgia Student Scholarship Tax Credit Program, please visit the website at http://public.doe.k12.ga.us/pea_policy.aspx?PageReq=PEAHB1133. As always, do not hesitate to contact us here at Jones and Kolb if you have any questions.

~~ Brian, Supervisor