Recently the Georgia legislature approved, HB 237, a bill that provides tax credits for donations to the Public Education Innovation Fund Foundation, which in turn, awards grants to public schools in Georgia. In our opinion, it is a win-win proposition for many Georgia taxpayers – reducing your tax liability while providing greatly needed financial assistance to spur innovation in school districts, charter schools, and traditional public schools. For more information on the foundation, read here: 2016 Innovation Fund Annual Report
Key Facts to Know about HB 237:
- The credit applies to tax years beginning on or after 01/01/2018.
- Both corporations and individuals are eligible to take the new credit.
- Taxpayers may carry forward unused credits for five years; but they cannot use credits against prior years’ tax liability.
- No credit is allowed for any amount deducted from a taxpayer’s taxable income as a charitable contribution to a 501(c)(3).
- Credit is capped at $5 million per tax year.
- To claim the credit, you must attach your official donation receipt (the one issued by the foundation) to your income tax return.
- The credit is automatically repealed on December 31, 2020.
- Corporation income tax requirements:
- The credit cannot exceed the actual donated amount or 75% of the corporation’s tax liability, whichever is lower; and
- The credit cannot exceed the taxpayer’s income tax liability.
- Individual income tax requirements:
- For a single individual or a head of household, the allowed credit is the lower of the amount donated or $1,000 per tax year;
- For married couples, filing-jointly, the credit allowed is the lower of the amount donated or $2,500 per tax year;
- For a member of a limited liability company, a shareholder of an S corporation, or a partner in a partnership, the credit allowed is the lower of the amount donated or $10,000 per tax year, but the credit is only allowed for the portion of the income on which the tax was paid by the individual member of the pass-through entity; and
- You also cannot designate your donation for the direct benefit of any school or program that benefits your child or children.
As always, if you have any questions about this credit or any other tax-related concerns, please don’t hesitate to contact Michael Maiorano, CPA/PFS, CFP® at firstname.lastname@example.org or 404.487.0500.
Reference: © 2017 Thomson Reuters/Tax & Accounting. All Rights Reserved.
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