Georgia Private School Tax Credit 2011
A HIDDEN GEORGIA TAX CREDIT YOU DON’T WANT TO MISS FOR 2011!
Tax write-off. Tax credit. Heard these terms before? Most people have. The problem is, tax professionals and non-tax professionals alike tend to throw them around as if they mean the same thing. They do not mean the same thing.
Tax write-offs (sometimes called “deductions”) refer to items that can decrease your taxable income, which is the number that the government will use to calculate your tax bill (using the tax rate percentages). By comparison, a tax credit means something much different. It is an amount that actually reduces your tax owed. For example, let’s look at someone with $100,000 in taxable income (at a 30% tax rate) and the difference between a $2,500 tax deduction and a $2,500 tax credit.
|Tax Deduction:||Tax Credit:|
|$100,000 taxable income||$100,000 taxable income|
|30% tax rate||30% tax rate|
|$30,000 taxes due||$30,000 taxes due|
|-2,500tax credit||$27,500 adjusted taxes due|
|$100,000 taxable income|
|-2,500 tax deduction|
|$97,500 adjusted taxable income|
|30% tax rate|
|$29,250 adjusted taxes due|
|$750 tax savings||$2,500 tax savings|
So, always make sure you clarify the difference and understand that when someone mentions a tax credit, you should pay attention.
For our clients that pay Georgia state income tax, The Georgia Private School Tax Credit is a relatively unknown tax credit that is written into Georgia law and provides up to a $2,500 tax credit. The law allows private citizens and corporations to receive tax credits for donations to Georgia Student Scholarship Organizations (SSOs). Most private schools are considered SSOs – And the citizen or corporation does not need to be related to nor have any direct interest in a student at the school, although in certain circumstances, donations can be driven to benefit a specific student.
This tax credit is limited to $50 million each calendar year, must be applied for, and usually runs out by the end of August. You must act fast in order to take advantage of this credit for 2011!
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