Georgia GOAL Now Accepting Applications
Are you in the market for a 2021 tax credit? If so, The Georgia GOAL Scholarship Program is now accepting applications. GOAL is a qualified Student Scholarship Organization (SSO) providing scholarships to deserving students in Georgia.
In 2008, Georgia’s elected officials signed the Education Expense Credit into law providing low-income and middle-income families in Georgia with access to better educational opportunities for their children. These scholarships are awarded to students who are currently enrolled in a Georgia secondary or primary public school or who are eligible to enroll in Pre-K, Kindergarten, or 1st grade. The average adjusted gross income (“AGI”) of the scholarship recipient families (as adjusted for family size) has been $27,689. Recipient students use their GOAL Scholarships to attend the private K-12 schools of their parents’ choice.
Past contributions to GOAL have made a remarkable impact on Georgia families and on the overall financial health of our school communities. In 2019, 12,500 Georgia taxpayers contributed $37.4 million to GOAL which provided K-12 educational opportunities to 16,823 students. By applying today, you not only get 100% state tax credit but most importantly, have the opportunity to provide essential support to under-served children in Georgia, especially during this critical time of need.
From the inception of the program in 2008 through May 31, 2020, GOAL has received $227,943,008 in tax credit contributions, which represents an estimated 40% of the total amount contributed statewide under the K-12 tuition tax credit program. During this time GOAL has awarded 41,229 scholarships worth $160.8 million to 16,980 students. The average value of the scholarship awarded to each student has been $3,899, with the balance of tuition costs being paid by scholarship families together with other financial aid provided by the participating private schools.
How to contribute:
Because there are limited tax credits available each year ($100 million for 2021), a taxpayer who is interested in contributing to GOAL must be pre-approved by the Georgia Department of Revenue (“DOR”). This simply means that the DOR sets aside a certain amount of the available tax credits specifically for the respective taxpayer.
Taxpayers submit their 2021 tax credit application to GOAL. Then, GOAL will take care of every remaining step, and will remind the taxpayer when action is required. Each step in the process is outlined below: * Please note the DOR requires that taxpayers file their Georgia income tax returns electronically in order to claim the Qualified Education Expense (“QEE”) tax credit.
- GOAL Submits Taxpayer Application to DOR: GOAL submits the taxpayer’s request for a 2021 tax credit to the DOR on the first business day of January 2021.
- DOR Informs Taxpayer of Approval: Taxpayer receives a DOR Approval Letter within 30 days after GOAL submits the application, indicating the amount for which he or she is approved and the deadline for making payment to GOAL.
- DOR Informs GOAL of Taxpayer Approval: GOAL also receives notice of taxpayer’s DOR approval, and GOAL will email taxpayer detailed instructions regarding payment deadline and options.
- Taxpayer Makes Payment to GOAL: When notified of DOR approval (by DOR Approval Letter or email from GOAL), taxpayer must submit payment to GOAL before his or her 60-day payment deadline.
- GOAL Emails Taxpayer Tax Receipt: GOAL will send taxpayer Form IT-QEE-SSO1 (tax receipt) for claiming the credit on his or her 2021 Georgia income tax return.
- Taxpayer Claims Georgia Income Tax Credit: When taxpayer files their 2021 taxes in 2022, he or she will take a 100% Georgia income tax credit. Tax filing guidance is available on GOAL’s website.
Tax Credit Limits Based on Filing Status
- Single individual or head of household – up to $1,000
- Married couple filing a joint return – up to $2,500
- Married couple filing a separate return – up to $1,250
- S corporation shareholder, LLC member, or partnership partner – up to $10,000
- C corporation or Trust – up to 75% of annual Georgia income tax liability
For Individuals
A single individual contributing to the Georgia GOAL Scholarship Program is eligible to receive a credit against his or her Georgia income tax liability in an amount equal to the amount contributed, or $1,000, whichever is less.
A married couple contributing to GOAL is eligible to receive a credit against their Georgia income tax liability in an amount equal to the amount contributed, or $2,500, whichever is less.
For an individual taxpayer filing a married filing separate return, the credit is limited to the amount contributed, or $1,250, whichever is less.
For Pass-Through Entity Owners
In addition to a 100% Georgia income tax credit, a federal deduction is also available for some pass-through business entities if they qualify as *ordinary and necessary business expenses.
In cases where a pass-through business entity (i.e., a limited liability company, partnership, or “S” corporation) does not pay state income taxes, under certain “facts and circumstances,” the business may be able to take a federal deduction for “ordinary and necessary” business payments made to a charitable organization.
Pass-through owners are limited to a Georgia income tax credit of up to $10,000 of the amount they contribute to Georgia GOAL, so long as they would have paid Georgia income tax in that amount on their share of taxable income from the pass-through entity. If both spouses earn income from pass-through entities, each can contribute up to the $10,000 limit for a total of $20,000.
For Corporations
Hundreds of corporations have contributed to the Georgia GOAL Scholarship Program, receiving a 100% Georgia income tax credit in exchange for their contributions of up to 75% of their corporation’s annual tax liability.
In addition to a 100% Georgia income tax credit, a federal deduction also available for “C” Corporations. When the IRS eliminated the federal deductibility of contributions to state income tax credit programs in 2018, they followed up by providing a safe harbor for “C” Corporations [IRS Rev. Proc. 2019-12], indicating that if the contributions to state income tax credit programs constitute *ordinary and necessary business expenses, then the businesses may deduct them as such.
*An ordinary expense is one that is common and accepted in a trade or business. A necessary expense is one that is helpful and appropriate for the trade or business. An expense does not have to be indispensable to be considered necessary.
For more information regarding this tax planning opportunity and for assistance in applying please contact us at info@hoffmanestatelaw.com or 404-255-7400.
