Georgia Private School Tax Credit 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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About the author  ⁄ Ted Jenkin @ Your Smart Money Moves

Ted Jenkin has spent the past 23 years giving personal financial advice to thousands of people across the United States. After graduating from Boston College in 1991, Ted spent more than 16 years working for American Express Financial Advisors/Ameriprise Financial. He was one of the youngest people in the history of the company to reach both Field Vice President and Group Vice President level. He managed more than 800 financial advisors throughout 8 states in his last position with the company. In 2008, Ted founded oXYGen Financial to help revolutionize the financial services industry by creating a new company that focused on serving the X and Y Generation. oXYGen Financial now has more than 2,200 clients throughout 25 states across the country many coming from social media techniques. Ted has been featured in over 30 magazines and newspapers including the Wall Street Journal, Business Week, and The Huffington Post. He was on the cover of Registered Rep magazine and featured in the ‘what will financial planning look like in 2023’ article done by Financial Planning Magazine. He has six advanced designations from the College for Financial Planning (CFP®, CRPC®, CRPS®, AWMA®, AAMS®, CMFC®) and is an on air radio personality.


  • Mike
    September 17, 2012

    Wow. What a great article. Thanks, Ted!

  • September 17, 2012


    Thanks for the compliment and for reading Your Smart Money Moves!

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