August 27, 2018

Georgia GOAL Scholarship Program – Tax Planning Opportunity

Taxpayers are continually looking for new opportunities to reduce the amount of federal and state income tax they are required to pay each year. The sweeping changes to the tax code resulting from the Tax Cuts and Jobs Act of 2017 (tax reform) have changed the tax planning landscape significantly. While most can expect to pay less in income taxes over prior years, many of the familiar tax incentives (including credits and deductions) have been eliminated or changed to reduce their benefit. These changes have left some wondering if there are additional tax planning opportunities available. The good news for Georgia taxpayers is through participation in the Georgia GOAL Scholarship Program they can not only reduce their taxes but also support a good cause. The program offers a compelling tax incentive to both individual and business taxpayers for participation. To help clients, prospects and others understand the benefit and impact on their situation, Wilson Lewis has provided a summary of key details below.

What is the GOAL Scholarship Program?

The GOAL Scholarship Program is a student scholarship organization that individual and business taxpayers located in the state of Georgia can make contributions to by redirecting a portion of their income tax payments in exchange for a state income tax credit. The Program uses the contributions to award scholarships to students in K-12 public schools that enables them to attend selected private schools.

What is the Tax Benefit?

The tax benefit received is directly related to the amount donated to the program. For 2019, the maximums for individual taxpayers are limited to $2,500 for married taxpayers filing jointly, $1,250 for married taxpayers filing separately (per individual), $1,000 for a single taxpayer and a taxpayer who is part of a pass-through entity (S-corporation or LLC) can claim up to $10,000. Corporations can receive a larger benefit as the credit is available for up to 75% of their annual Georgia income tax liability. It’s important to note unused amounts of the credit can be carried forward for up to five years.

Program Participation

Since this is a state tax credit, there is a limited amount of funds available for taxpayers to claim. For 2019, the total amount available was increased to $100M which means there is an opportunity for more taxpayers to participate. Unlike other tax credits, a taxpayer is not able to simply claim the credit if they meet the qualification criteria. Those who are interested in the program must apply and be pre-approved by the Georgia Department of Revenue to obtain benefits. The process includes:

• Submit an Application – Using the Program’s website, a taxpayer submits their application for program participation. There are separate applications that must be completed for first time and returning donors. Information will be requested about taxpayer status, requested donation amount and school to receive the scholarship. If you are unsure of the schools participating in the program, view the directory of 130 schools currently participating.
• Application Submission – The Program will submit the application to the Georgia Department of Revenue (DOR) on the first business day of 2019. The DOR will confirm the receipt of application with each taxpayer, whether business or individual.
• Credit Approval – The DOR will inform all taxpayers who have been accepted into program via a letter of approval which includes the amount of credit that is authorized to claim. It’s important to note that taxpayers may not receive the full credit amount which they have requested. The Program will also receive notification of credit approval and will work with the taxpayer to facilitate the process.
• Payment – Once approval has been received, the taxpayer has 60 days to make payment to the Program. Program participants will receive an acknowledgement letter of their donation and a tax receipt, no later than May 2019.
• Claim the Credit – When the taxpayer files their 2019 state income tax return, they will claim a credit in the approved amount. It’s possible they will also be able to claim a federal charitable contribution credit assuming they itemize deductions.

Contact Us

The Georgia GOAL Scholarship Program is an excellent opportunity to reduce your state income tax liability while helping a good cause. The increase in the total amount available to fund the credit and recent changes to tax laws makes this a compelling opportunity to save on taxes. If you have questions about the Program or need assistance with your tax planning efforts, Wilson Lewis can help! For additional information please call us at 770-476-1004 or click here to contact us. We look forward to speaking with you soon!