Georgia Qualified Education Expense Credit: A Big Win, If You Can Get It

Georgia Qualified Education Expense Credit: A Big Win, If You Can Get It

By Michael Maiorano, CPA

Student Scholarship Organization Program Explained

Georgia initially created its Student Scholarship Organization (SSO) program in 2008 to help expand school choice and give Georgians more control over the spending of their education dollars. Individuals, families, and business are eligible to receive a Georgia income tax credit (dollar-for-dollar) for contributions made to a Georgia SSO. The funds are pooled together to provide scholarships to help cover the cost of private school education for deserving families. The increased popularity of the program, along with the beneficial tax attributes, has created a limited supply of funds available for donors. For 2015, Georgia’s allocated funding was capped at $58 million and was exhausted within one day. A new allocation of $58 million will be available beginning January 1, 2016. Like last year, we anticipate taxpayers will exhaust this allocation within the first day. We advise taking advantage of pre-registration NOW by reserving your spot online. Your donation will not be due until early 2016. All three Student Scholarship Organizations (SSO) are participating in this pre-registration; please choose the appropriate link below:

What are the Contribution Levels? Who Benefits?

  • An individual taxpayer can donate up to $1,000 if single, and $2,500, if married, to an approved Student Scholarship Organization (SSO) and take that amount as a tax credit.
  • An individual taxpayer who is a member of a Limited Liability Company, a shareholder of a Subchapter S Corporation, or a partner in a Partnership can contribute up to $10,000; the taxpayer must have at least $166,667 of income from one or more of these pass-through tax entities. (The rules here can get tricky, so feel free to give me a call; I am happy to discuss this further.)
  • A corporation can contribute too; for a C Corporation, the tax credit is available for up to 75% of the annual Georgia income tax liability.

And Wait, There Is More – AMT Filers Make Money

If you are a taxpayer stuck in Alternative Minimum Tax (AMT), this charitable contribution can make you money! That’s right, AMT filers are ahead by 28% on these contributions. Here’s how it works:

  • You (an AMT filer) contribute $2,500 to an SSO, which reduces your Georgia tax liability by $2,500.
  • You also deduct $2,500 charitable contributions on your federal income tax return.

For AMT filers, state tax liability is a non-deductible item (i.e. all state income tax deductions are added back to calculate the AMT tax liability). Therefore, your $2,500 of non-deductible state tax liability is converted into a $2,500 charitable contribution.

So, when the dust settles, an AMT filer who redirects $2,500 through the SSO program, receives $700 (28%) in an additional tax benefit on his or her federal income tax return.

Steps Required to Claim Your Credit 

I’ve explained the benefits of the education expense credit; now let me outline the steps to claim it:

  1. Select your Student Scholarship Organization (SSO).
  2. Request pre-approval from Georgia Department of Revenue by using form Georgia Form IT-QEE-TP1. This step is typically handled electronically by the SSO of your choice.
  3. Obtain approval by mail from the Georgia Department of Revenue; response time is typically within 30 days of receiving the taxpayer’s request.
  4. Contribute to the SSO and designate the recipient school. You must contribute and make your selection within 60 days of the date on your DOR preapproval notice and within the preapproved calendar year.
  5. File your tax returns with all confirmations and appropriate forms from the SSO and the Georgia Department of Revenue.

Feel free to reach out to your TrueWealth advisor for details on how this strategy could help you achieve your goals.


Michael Maiorano is Principal at TrueWealth, LLC, a wealth management firm located in Atlanta. He has extensive tax planning knowledge for complicated tax income issue. His knowledge of business succession and wealth transfer complements the technical expertise and financial planning of TrueWealth. He can be reached at mmaiorano@truewealth.com or 404.487.0505.

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