1. What is the history and purpose of the tuition tax credit legislation that gave rise to the Georgia GOAL Scholarship Program?
In 2008, the Georgia General Assembly passed the Qualified Education Expense (QEE) Tax Credit bill (HB 1133), and Governor Sonny Perdue signed it into law. The legislation was further amended in 2011 (HB 325) and 2013 (HB 283). The law provides for the creation of student scholarship organizations (SSOs) to which Georgia individual and corporate taxpayers can contribute in exchange for a state income tax credit and possible federal charitable income tax deduction. The SSOs use the contributions to award scholarships to students from K-12 public schools so that they can attend the private schools chosen by their parents. Georgia GOAL Scholarship Program, Inc. was the first SSO to be recognized by the Georgia Department of Education.
2. What other schools are participating in Georgia GOAL Scholarship Program?
There are presently 132 GOAL Participating Schools from throughout the state of Georgia. The list of GOAL Participating Schools accessible on the GOAL website at: http://www.goalscholarship.org/participating_schools/.
3. How does the Qualified Education Expense Tax Credit work?
Because there are limited tax credits available each year ($58 million for 2018), 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.
So, the taxpayer will submit his or her 2018 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:
a. GOAL Submits Taxpayer Application to DOR: On the first business day of January 2018, GOAL will submit the taxpayer's request for a 2018 tax credit to the DOR. Shortly thereafter, GOAL will notify taxpayer by email that the application has been submitted.
b. DOR Informs Taxpayer of Approval: Taxpayer will receive 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.
c. 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.
d. 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.
e. GOAL Emails Taxpayer Tax Receipt: GOAL will send taxpayer an acknowledgement letter and tax receipt (Form IT-QEE-SSO1), in May 2018.
f. Taxpayer Claims Georgia Income Tax Credit: When taxpayer files their 2018 taxes, he or she will take a Georgia tax credit and (if taxpayer itemizes) a federal charitable income tax deduction. Effective in 2018, this federal deduction is important and provides value to most taxpayers, given the limitations imposed on state and local (SALT) tax deductions by the Tax Cut and Jobs Act (2018 federal tax legislation). For further explanation, please see Federal Income Tax Deductions. In addition, tax filing guidance is available on GOAL's website.
4. What is the maximum amount that an individual can contribute to GOAL in exchange for a Georgia education expense tax credit?
Each calendar year, until the annual cap on available education expense credits is reached:
- A married couple filing a joint return can redirect up to $2,500 of their income tax payments to GOAL.
- A married couple filing a separate return can redirect up to $1,250 (each) of their income tax payments to GOAL.
- A single individual can redirect up to $1,000 of his or her income tax payments to GOAL.
- An individual who is a member of a limited liability company, shareholder of an "S" Corporation, or partner in a partnership (pass-through entities) is allowed a Georgia income tax credit for up to $10,000 of the amount they contribute to a SSO, so long as they would have paid Georgia income tax in that amount on their share of taxable income from the pass-through entity. (See Q&A items 36. through 41. for more information for owners of pass-through entities.)
5. Do I have to donate (redirect) the full amount allowed?
You may donate as little or as much as you want up to the following limits: $2,500 for a married couple filing jointly, $1,250 for married people filing separately, $1,000 for an individual filing singly, and $10,000 for an individual owner of a pass through entity. Importantly, please note that if taxpayer is pre-approved by DOR for an amount greater than the amount taxpayer actually contributes, the "excess" of the amount pre-approved over the amount contributed is lost from the available tax credits for the year, and will not be made available to other taxpayers.
6. Can corporations contribute to the Georgia GOAL Scholarship Program?
Yes, corporations can receive a tax credit for amounts contributed to the GOAL Scholarship Program and many corporations have done so. For "C" corporations, the tax credit is available up to 75% of their annual Georgia income tax liability. Members of limited liability companies, shareholders of "S" Corporations, and partners in partnerships are allowed a Georgia income tax credit for up to $10,000 of the amount they contribute to a SSO, so long as they would have paid Georgia income tax in that amount on their share of taxable income. Importantly, please note that if taxpayer is pre-approved by DOR for an amount greater than the amount taxpayer actually contributes, the "excess" of the amount pre-approved over the amount contributed is lost from the available tax credits for the year, and will not be made available to other taxpayers.
7. What forms of payment does GOAL take for donations?
GOAL accepts checks, credit card payments, or stock donations.
8. Is there an age or other restriction on who can participate in this program?
There are no age restrictions on who can participate in this program. As long as you owe state taxes, you can redirect your Georgia income taxes to GOAL.
9. Do I really receive a tax benefit from donating if I itemize my federal income tax deductions and my state and local tax (SALT) deduction is limited as a result of the 2018 federal tax legislation (Tax Cut and Jobs Act)?
- The main impact of the new federal tax legislation, as related to our program, is the limitation of the state and local tax (SALT) deduction for taxpayers who itemize. The new law limits the deduction for all state and local income and property taxes to $10,000. This means that, beginning in 2018, Georgia taxpayers will no longer be able to deduct any portion of their Georgia income taxes paid on their federal income tax returns that exceed the $10,000 cap.
- Contributing to GOAL will make this less of a 'sting' for Georgia taxpayers. While no longer able to deduct the payment of their Georgia income and property taxes exceeding $10,000, taxpayers WILL CONTINUE to be able to deduct their contributions to GOAL (as charitable deductions) on their federal income tax returns. Bottom line: by contributing to GOAL, taxpayers whose SALT deduction is limited will hang onto at least a portion of the deduction they would otherwise be losing.
- Prior to 2018, taxpayers who paid Alternative Minimum Tax (AMT), which always disallowed the deduction of state income and property taxes for federal tax purposes, received a larger benefit for contributing to GOAL. While the SALT deduction will now be limited for everyone, AMT has been rendered largely irrelevant. Therefore, ALL taxpayers who itemize, and whose SALT deduction is limited, will retain an important deduction and reap a monetary benefit by contributing to GOAL.
10. How does a tax credit differ from a deduction?
A tax credit is significantly more beneficial than a deduction. A credit reduces your Georgia taxes dollar-for-dollar while a deduction reduces the taxable income upon which taxes are calculated.
11. How do I know what my Georgia income tax liability is?
Your Georgia income tax liability is typically 6% of your Adjusted Gross Income (AGI). If your income and deductions will not change much from the prior year, you can look at Line 16 of your Georgia income tax return (Form 500) for your income tax liability for the prior tax year and estimate your tax liability accordingly. Of course, only an accountant or other tax professional can provide you with a solid estimate of your upcoming Georgia income tax liability.
12. If an individual has paid all of his or her estimated Georgia income taxes for a particular tax year and makes a contribution to GOAL in that year, will he or she still receive a Georgia income tax credit for the amount contributed to GOAL?
Yes. If, after applying the tax credit against the Georgia income tax due and applying all estimated tax payments and withheld income taxes, there is an overpayment, the taxpayer can elect to have all or a portion of the overpayment paid to him or her.
13. Can I reduce my Georgia income tax withholdings so that I can recoup my funds earlier than I would at tax filing time?
Yes. If you pay your Georgia income taxes by having an amount withheld each pay period from your paycheck, by reducing the amount of Georgia income tax that is withheld from your paycheck each pay period, you can recoup your contribution to GOAL evenly over the remainder of the tax year. The portion by which you should reduce your withholdings is the amount of your contribution to GOAL divided by the remaining pay periods in the year. This results in greater take-home pay throughout the year, as opposed to a potential refund at tax filing time.
For example: If you are paid twice per month and contribute $1,200 to GOAL in mid-March, and you adjust your Georgia income tax withholdings in time to take effect for your March 31st paycheck, as of March 31st, there are 19 pay periods remaining for the year. You may reduce your withholdings by $63.16 per pay period, which is $1,200 divided by the 19 remaining pay periods for 2018. The additional amount of "take home pay" will total $1,200 by the end of 2018.
14. If an individual itemizes deductions, can they take a charitable income tax deduction on their federal income tax return for the amount of their contribution to GOAL?
Yes. Since GOAL is a 501(c)(3) tax-exempt organization, contributions to GOAL may be taken as charitable income tax deductions for federal income tax purposes. The law does require that you increase your State income by the amount of your charitable deduction on your Federal Return (donation amount). For more information on the benefit associated with the federal charitable income tax deduction in exchange for your contribution to GOAL, see question 9 above.
15. I usually get a refund from Georgia. What happens if I donate to GOAL?
For taxpayers who contribute to GOAL as individuals who are single, married filing separate, or married filing jointly, if your Georgia income tax liability is at least as much as your GOAL contribution, your refund will increase by the amount of your donation. If on the other hand, your state income tax liability is less than the amount of your contribution to GOAL, the amount of the unused credit can be carried forward for 5 years.
16. Will this trigger an audit of my return?
No. The credit is applied against your Georgia income tax liability, and is preapproved by the state of Georgia. It is treated just like additional withholding tax. GOAL has developed a solid line of communication with DOR officials responsible for administration of the Georgia Education Expense Credit and works closely with them to ensure the fair and responsive administration of this program.
17. If I redirect some of my Georgia income tax payment to GOAL, can I designate that it be used to provide scholarships at a specific school?
Yes. The designation of a particular school (or multiple schools) is permissible, and, as long as the school(s) meets the legal requirement that all funds raised in one calendar year must be fully allocated to specific student recipients by the end of the following calendar year, the donor's donation will be obligated to provide scholarships to eligible students to attend the designated school(s). At least once a year, a school's financial aid office will recommend to GOAL qualified applicants for receipt of GOAL scholarships, the amount of which is based on applicant household income and family size.
18. If I redirect some of my Georgia tax payments to GOAL, can I designate the student who will benefit from the financial assistance?
No. Although a donor to GOAL may designate a school, no designation of individual students is permitted. Per most recently amended legislation (HB 283): "(1) The tax credit shall not be allowed if the taxpayer designates the taxpayer's qualified education expense for the direct benefit of any particular individual, whether or not such individual is a dependent of the taxpayer. (2) In soliciting contributions, a student scholarship organization shall not represent, or direct a qualified private school to represent, that, in exchange for contributing to the student scholarship organization, a taxpayer shall receive a scholarship for the direct benefit of any particular individual, whether or not such individual is a dependent of the taxpayer. The status as a student scholarship organization shall be revoked for any such organization which violates this paragraph."
19. What is the deadline for making contributions that qualify for the tax credit?
In order to contribute to GOAL for a tax credit, an individual or corporation must receive pre-approval from the Georgia Department of Revenue. The pre-approval process must be completed and all contributions postmarked to GOAL within 60 days of DOR pre-approval, and never later than December 31st of the applicable calendar year in order to be accepted.
Based on the anticipated timeline for 2018, in which all $58 million of education expense tax credits will likely be consumed on the first day of January 2018, we estimate that most payments will be due by mid-March of 2018.
20. Why should I submit my application now for a 2018 tax credit, when it is still 2017?
In 2008, the Georgia legislature placed an annual cap on the amount of available education expense credits. Initially, the cap was set at $50 million. Beginning in 2012, the cap was increased to reflect increases in the cost-of-living inflation rate. In 2013, the cost-of-living adjustment was replaced by an increase in the cap to $58 million.
In 2014, the entire $58 million cap on available education expense tax credits was met in just three weeks, on January 22, 2014. Since 2015, the entire $58 million cap has been met on the very first business day of the year. In fact, taxpayer requests for pre-approval from the DOR for desired contributions to SSOs increasingly exceed the $58 million annual cap on education expense credits. As a result, Georgia taxpayers are currently approved for a prorated percentage of their intended contribution amounts. In 2017, the DOR received more than $117 million in 2017 Education Tax Credit applications in one day, meaning all taxpayer applications were be prorated down to a proration percentage of 49.49%.
Once the cap is reached, although a taxpayer can still contribute to GOAL, he or she will not receive an education expense tax credit for doing so. Because there are hundreds of private schools in Georgia that are promoting the availability of the Georgia Education Expense Credit program in their school communities, it is a very competitive environment, and taxpayers need to start the process of applying for a tax credit in the year prior to the one in which they will contribute and take the tax credit.
21. Will I be approved for less than my intended contribution amount?
Given the popularity of the Georgia Education Expense Credit program, and the limited availability of tax credits, it is very likely that taxpayers will only be approved for a portion of their requested contribution amounts in 2018. This is why now, more than ever, GOAL participating schools will need their constituents to contribute to this program, so that they can continue to provide scholarships to deserving families.
22. What if I pay quarterly estimated taxes?
If you pay your current year's Georgia income taxes on a quarterly basis, in four equal installments, due on April 15, June 15, September 15, and January 15 (of the following year), you can reduce a portion of each quarterly estimated income tax payment if you contribute to GOAL for a tax credit within the same year.
To determine the amount by which you can reduce each quarterly estimated income tax payment, divide by four the total amount that you contributed to GOAL for the year and reduce each quarterly estimated tax payment accordingly.
Example: This year, you estimate that you will owe $10,000 of Georgia income taxes for the year. Of this amount, you contribute $1,200 to GOAL in March for which you will receive a corresponding Georgia income tax credit. Normally, you would make an estimated income tax payment to the state of $2,500 on April 15, June 15, September 15, and January 15 (of the following year). Because you will be redirecting $1,200 of your Georgia income tax payments to GOAL, you can reduce each of these estimated income tax payments by $300 ($1,200 divided by four), meaning that $2,200 will be the amount of each quarterly estimated income tax payment due to the state of Georgia.
23. What if my Georgia income tax liability is less than the amount I contributed to GOAL? Do I lose that money?
For taxpayers who contribute to GOAL as individuals who are single, married filing separate, or married filing jointly: no, you do not lose the money. The tax credit will apply toward your taxes for up to five future years. Taxpayers who contribute to GOAL as "C" Corporations or as owners of pass-through entities cannot carry-forward any education expense tax credits.
24. May I paper file my taxes and claim this credit?
No, as this credit (along with all Series 100 credits in Georgia) may only be claimed if you file your taxes electronically.
25. Can I designate that my contribution be split between multiple schools?
Yes. Simply indicate on your GOAL Tax Credit Form how much money you would like to go to each school, and GOAL will ensure your contribution is allocated accordingly.
26. Can I split my contribution between a GOAL school and a non-GOAL school?
Yes. As long as the other school has signed up to participate with an approved Student Scholarship Organization ("SSO"), you can designate a portion of your contribution for that school, and GOAL will simply forward those funds to their SSO partner. GOAL does not take any administrative fees out of the money that we forward to other SSOs.
27. How long does it usually take to receive approval from the Department of Revenue for my contribution?
Under the law, the Department of Revenue has 30 days to approve your contribution. As a result of recent automation, the DOR currently provides approval within approximately two weeks.
28. Can I contribute the GOAL program for a tax credit if I don't reside in the state of Georgia?
Yes. As long as you pay Georgia state income taxes you can contribute to the GOAL program for a tax credit, even if you don't physically reside in the state of Georgia.
29. Do I have to make my entire contribution at once, or can I contribute in increments over the course of the year?
It is recommended by GOAL that you apply for and make your full desired contribution at once. Due to the pace at which the cap on these tax credits is met, it is not possible to spread your payments throughout the year (all payments will be due by mid-March of 2018).
30. Can I change the designation of my contribution after I have completed the contribution process?
Once you have designated a particular school and the funds have been deposited into that school's designated account at GOAL, you cannot change the designation of your contribution.
31. What happens if I give a donation to GOAL but I find out that my school is working with another SSO?
We will process your donation as any other and will pass the full balance of the funds to the correct SSO.
32. Where is this credit explained in the Georgia Law?
The tax credit guidelines are listed in the Georgia Code Title 48 Chapter 7-29.16. The details of the qualified Student Scholarship Organization are listed in the Georgia Code Title 20 Chapter 2A. If you have any additional issues or questions, please refer the Georgia Department of Revenue website, https://etax.dor.ga.gov/inctax/taxcredits.aspx
33. Is the Georgia GOAL Scholarship Program a government agency? What is its role?
No. Georgia GOAL Scholarship Program, Inc. is an independent 501 (c)(3) tax-exempt organization. GOAL, not the state of Georgia, provides scholarships to students at its participating schools. In addition to saving its participating schools the trouble of creating and operating their own student scholarship organizations, GOAL serves as an information clearinghouse; provides marketing information, insights, and training to the GOAL Participating Schools; provides extensive contribution and scholarship processing to its donors, participating schools, and scholarship families; monitors legal and regulatory developments; shares best practices among participating schools; solicits contributions from corporations; promotes the program in the CPA and financial community; and encourages participating schools to direct as much financial aid as possible to low- and middle-income families who otherwise would not have a choice to attend a Georgia private school.
34. What is GOAL's tax ID number?
GOAL's tax ID number (FEIN) is 65-1280229.
35. How can I learn more about GOAL?
GOAL is the most transparent SSO in Georgia. On its website you can read all about GOAL's contribution and scholarship award results, its participating schools, its Board members, the contribution process, and all other aspects of its operations. GOAL also operates a Facebook, Twitter, and YouTube account, all of which are accessible on its website.
Important information for individuals who are members of limited liability companies, shareholders of "S" Corporations, and partners in partnerships
Individuals with ownership in S-Corps, LLCs or Partnerships (pass-through entities) may contribute up to $10,000 to GOAL for a tax credit.
Members of limited liability companies, shareholders of "S" Corporations, and partners in partnerships are allowed a Georgia income tax credit for up to $10,000 of the amount they contribute to a SSO, so long as they would have paid Georgia income tax in that amount on their share of taxable income.
If husband and wife both earn income from pass-through entities, each can contribute up to the $10,000 limit for a total of $20,000.
36. How does this work if I own more than one pass-through entity?
If the individual has ownership in more than one pass-through entity, the total credit allowed cannot exceed $10,000. The individual decides which pass-through entities to include when computing Georgia income for purposes of this tax credit and may combine all Georgia income, loss and expense regardless of ownership in multiple pass-through entities.
37. How do I determine whether I can take the full $10,000 tax credit?
All Georgia income, loss and expense from the taxpayer-selected pass through entities will be combined to determine Georgia income for purposes of this credit. Note: even W2 income from the entity may be included as well as K-1 income (i.e., salaries and profits may be counted). Such combined Georgia income shall be multiplied by 6% to determine that tax that was actually paid.
Helpful example: the taxpayer's Georgia income from pass through entities must be at least $166,667 to take advantage of the full $10,000 tax credit ($166,667 * 6% = $10,000).
38. May I also claim a credit as an individual tax filer?
If the taxpayer chooses to be preapproved under this option, they are not allowed the additional amounts normally allowed an individual.
39. Can this tax credit be carried forward?
No. 6% of the Georgia income from pass through entity (or entities) is the maximum amount that may be claimed as a tax credit, and any excess amounts may not be claimed in the current year and may not be carried forward. Any excess amount that is paid to GOAL will be a charitable contribution and not a tax credit.
40. Can my payment to GOAL be made from my business (my pass-through entity)?
No. The Department of Revenue requires that payment to the SSO must come from the individual who will be claiming the tax credit.
41. What is the economic cost or potential economic benefit of making the full $10,000 contribution for an Education Expense tax credit?
An "economic cost" results from Georgia law not allowing a deduction for the scholarship contribution when taking the Georgia tax credit – which would be "double dipping."
INDIVIDUALS, including owners of Pass-Through Entities (S-Corps, LLCs, Partnerships)
Taxpayers receive a Georgia tax benefit equal to 94% to 137% of the contribution.
- The benefit may be slightly less than 100% because the law does not allow a Georgia income tax deduction for the contribution when taking the Georgia income tax credit. Georgia says this would be "double dipping."
- The benefit will be greater than 100% for taxpayers who itemize and whose "SALT" deduction (state and local income and property taxes) is limited before making a contribution to GOAL, as they will trade a nondeductible state tax payment for a deductible charitable contribution. (By contributing some of their state income taxes to GOAL, the expenditure is considered a charitable contribution, as GOAL is a 501(c)(3) charitable organization.)
The following taxpayers may have the following 'true cost' or potential economic benefit:
Single taxpayer - $ 1,000 contribution (maximum tax credit limit)
- Standard deduction $ 0 maximum cost
- Itemized deduction $ 60 maximum cost
- SALT deduction limited before and after contribution $ 370 possible maximum economic benefit
Married filing jointly - $ 2,500 contribution (maximum tax credit limit)
- Standard deduction $ 0 maximum cost
- Itemized deduction $ 150 maximum cost
- SALT deduction limited before and after contribution $ 925 possible maximum economic benefit
Individual pass-through entity owner - $10,000 contribution (maximum tax credit limit)
- Itemized deduction $ 600 maximum cost
- SALT deduction limited before and after contribution $ 3,700 possible maximum economic benefit
C-Corporations receive a Georgia tax benefit equal to 96% to 103% of the contribution. In effect, Georgia is subsidizing a substantial portion of the contribution. This is the result of three factors:
- 100% of Georgia tax credit for amount of contribution up to 75% of Georgia tax liability.
- Offset by 6% additional Georgia taxes on higher Georgia income. The higher Georgia income is because the law does not allow a deduction for the scholarship contribution when taking the Georgia tax credit.
- Lower other state taxes because nondeductible state tax expense is converted to a deductible charitable contribution for other states.
For examples, see Sample Tax Effect of Contribution.