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State and Local Tax Limitations Have Taxpayers Looking for Extra Credit

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By Bobby Hoffman

The Tax Cuts and Jobs Act of 2017 significantly impacts all taxpayers. For individuals, it will have the most noticeable impact on itemized deductions:  the standard deduction has nearly doubled; and with the new limit on deducting state and local taxes (SALT), many taxpayers may not be itemizing this year.

The standard deduction in 2018 for single taxpayers is $12,000  and for married couples filing jointly is $24,000.  The cap on SALT combined with real estate taxes is $10,000 for married filing joint taxpayers ($5,000 for single taxpayers) so these taxpayers must have over $14,000 of other deductions (medical, interest, charitable, etc.) in order to even consider itemizing. This provides incentive to look at state tax credits to offset the inability to itemize or deduct all SALT paid.  For Georgia residents in particular, there are a number of available options that include both donation tax credits and transferable (or purchased) tax credits.

Donation tax credits allow a charitable deduction on a taxpayer’s Federal tax return. If the taxpayer is able to itemize deductions this results in the exchange of nondeductible state income tax payments for deductible charitable contributions.  The most notable of these credit programs are for the benefit of rural hospitals and private education in Georgia both of which are full for 2018.  In order to receive the benefit for the 2019 tax year, all required pre-approved forms must be submitted by the end of 2019. Please note that donation tax credits may not be as advantageous for taxpayers choosing not to itemize. Taxpayers that are interested in taking advantage of these credits should do so as soon as possible.

Transferable (or purchased) state tax credits allow a taxpayer to purchase unused credits from a third party. The most notable credit of this type is film tax credits. These entertainment credits are available at a discount for approximately 92 cents on the dollar and credits for the 2018 tax year can be purchased in 2019.

We highly recommend our clients take advantage of these tax saving opportunities. If you are interested in using Georgia Entertainment Tax Credits or for more information on donation tax credits please feel free to give us a call at 404-255-7400 or send us an email at info@hoffmanestatelaw.com.


  • Bobby Hoffman

    Bobby joined the Tax Department at Hoffman & Associates in early 2012 after gaining both Audit and Tax experience while working at a local CPA firm. He specializes in tax planning and compliance for individuals and small businesses.

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