Compilation of Rules and Regulations of the State of Georgia › Department 560 - RULES OF DEPARTMENT OF REVENUE › Chapter 560-7 - INCOME TAX DIVISION › Subject 560-7-8 - RETURNS AND COLLECTIONS › Rule 560-7-8-.60 - Qualified Education Donation Tax Credit

Current through Rules and Regulations filed through June 27, 2024
(1)
Purpose.
The purpose of this regulation is to provide guidance
				concerning the administration of the tax credit under O.C.G.A. §
				48-7-29.21.
(2)
Definitions.
As used in this regulation, the terms "qualified
				education donation" and "recipient" shall have the same meaning as in O.C.G.A.
				§ 48-7-29.21.
(3)
Credit
				Amount.
The amount of qualified education donation tax credit allowed a
				taxpayer shall be as follows:
(a) For an
				individual taxpayer, the credit amount shall not exceed $1,000, or the actual
				amount donated, whichever is less.
(b) For an individual taxpayer filing married
				filing separate, the credit amount shall not exceed $1,250, or the actual
				amount donated, whichever is less.
(c) For individual taxpayers filing married
				filing joint, the credit amount shall not exceed $2,500, or the actual amount
				donated, whichever is less.
(d) For
				an individual taxpayer who is a member of a limited liability company duly
				formed under state law, a shareholder of a Subchapter 'S' corporation, or a
				partner in a partnership, the credit is limited to the lesser of the actual
				amount donated or $10,000 per tax year, whichever is less; provided, however,
				that the tax credits shall only be allowed for the Georgia income on which such
				tax was actually paid by such member of a limited liability company,
				shareholder of a Subchapter 'S' corporation, or partner in a partnership. In
				determining such Georgia income, the shareholder, partner, or member shall
				exclude any income that was subtracted on their Georgia return because the
				entity paid tax at the pass-through entity level in Georgia as provided in
				Regulation
				560-7-3-.03. If the individual
				taxpayer is a member, partner, or shareholder in more than one pass-through
				entity, the total credit allowed cannot exceed $10,000; the individual taxpayer
				decides which pass-through entities to include when computing Georgia income
				for purposes of the qualified education donation 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 the qualified education
				donation tax credit. Such combined Georgia income shall be multiplied by the
				applicable marginal tax rate to determine the tax that was actually paid. If
				the taxpayer is filing a joint return, the taxpayer's spouse may also claim a
				credit for their ownership interests and shall separately be eligible for a
				credit as provided in this subparagraph. If the taxpayer(s) chooses to be
				preapproved pursuant to this subparagraph, for all purposes of claiming the
				credit they shall be subject to the provisions of this subparagraph and shall
				not be entitled to claim any other amounts provided in O.C.G.A. §
				48-7-29.21 and this regulation. If the taxpayer is preapproved for an amount
				that exceeds the amount that is calculated as allowed when the return is filed,
				the excess amount cannot be claimed by the taxpayer and cannot be carried
				forward.
1. Example: Taxpayer, an individual
				taxpayer, is the sole shareholder of A, Inc., an S corporation, Taxpayer is
				also a 50% partner, in BC Company, a partnership, and Taxpayer is also a 20%
				member of a limited liability company, XYZ Company, which is taxed as a
				partnership. Taxpayer requests preapproval for the qualified education donation
				tax credit for calendar year 2022 by electronically submitting Form IT-QED-TP1
				through the Georgia Tax Center. On Form IT-QED-TP1, Taxpayer estimates that the
				taxpayer's Georgia income from A, Inc. is $120,000, and that Taxpayer's share
				of Georgia income from BC Company is $60,000, Taxpayer chooses not to include
				any income from XYZ Company when estimating Georgia income for purposes of the
				qualified education donation tax credit; therefore the Department preapproves
				Taxpayer for $10,000 qualified education donation tax credit (since $10,000 is
				less than $10,350 (5.75% of $180,000)), the applicable marginal tax rate for
				2022 is 5.75%. Taxpayer makes a $10,000 donation to the recipient within 60
				days of receiving preapproval from the Department and before the end of 2022.
				When Taxpayer files Taxpayer's 2022 Georgia income tax return, Taxpayer
				received a salary from A, Inc. of $50,000 and A, Inc.'s actual Georgia income
				is $60,000; Taxpayer's actual share of Georgia income from BC Company is
				$20,000 and Taxpayer received a guaranteed payment from BC Company of $15,000;
				Taxpayer's actual share of Georgia income from XYZ Company is $5,000 (the
				Taxpayer can choose to include this company even though it was not considered
				at the time of preapproval), Taxpayer can only claim $8,625 qualified education
				donation tax credit (which is 5.75% of the $150,000 actual income from
				Taxpayer's selected pass-through entities), and the extra $1,375 cannot be
				claimed by Taxpayer and cannot be carried forward. Any amount of the $8,625
				qualified education donation tax credit claimed but not used on the taxpayer's
				2022 Georgia income tax return shall be allowed to be carried forward to apply
				to the taxpayer's succeeding five years' tax liability.
(e) For a corporation taxpayer, fiduciary
				taxpayer, an S corporation that makes the election to pay tax at the entity
				level under O.C.G.A. § 48-7-21, or a partnership that makes the election
				to pay tax at the entity level under O.C.G.A. § 48-7-23, the credit amount
				shall not exceed 75 percent of the corporation's, fiduciary's, electing S
				corporation's, or electing partnership's income tax liability, or the actual
				amount donated, whichever is less. A fiduciary cannot pass through the credit
				to its beneficiaries.
1. Example: Taxpayer, a
				corporation, requests preapproval for the qualified education donation tax
				credit for calendar year 2022 by electronically submitting Form IT-QED-TP1
				through the Georgia Tax Center. On Form IT-QED-TP1 Taxpayer's intended
				contribution for 2022 is $100,000; and Taxpayer's estimated income tax
				liability for the 2022 tax year is $100,000; therefore the Department
				preapproves Taxpayer for $75,000 qualified education donation tax credit for
				calendar year 2022. Taxpayer makes a $75,000 donation to the recipient within
				60 days of receiving preapproval from the Department and before the end of
				2022. When Taxpayer files their 2022 Georgia income tax return, Taxpayer's
				income tax liability for tax year 2022 is $80,000, Taxpayer can only claim
				$60,000 of qualified education donation tax credit ($60,000 is 75% of their
				actual Georgia income tax liability for tax year 2022), and the extra $15,000
				cannot be claimed by Taxpayer and cannot be carried forward. Any amount of the
				$60,000 qualified education donation tax credit claimed but not used on the
				taxpayer's 2022 Georgia income tax return shall be allowed to be carried
				forward to apply to the taxpayer's succeeding five years' tax
				liability.
2. Example: Taxpayer, a
				S Corporation electing to pay tax at the entity level, requests preapproval for
				the qualified education donation tax credit for calendar year 2022 by
				electronically submitting Form IT-QED-TP1 through the Georgia Tax Center. On
				Form IT-QED-TP1 Taxpayer's intended contribution for 2022 is $100,000; and
				Taxpayer's estimated income tax liability for the 2022 tax year is $100,000;
				therefore the Department preapproves Taxpayer for $75,000 qualified education
				donation tax credit for calendar year 2022. Taxpayer makes a $75,000 donation
				to the recipient within 60 days of receiving preapproval from the Department
				and before the end of 2022. When Taxpayer files their 2022 Georgia income tax
				return, Taxpayer's income tax liability for tax year 2022 is $80,000, Taxpayer
				can only claim $60,000 of qualified education donation tax credit ($60,000 is
				75% of their actual Georgia income tax liability for tax year 2022), and the
				extra $15,000 cannot be claimed by Taxpayer and cannot be carried forward. Any
				amount of the $60,000 qualified education donation tax credit claimed but not
				used on the taxpayer's 2022 Georgia income tax return shall be allowed to be
				carried forward to apply to the taxpayer's succeeding five years' tax liability
				but shall not be allowed to be passed through to and used by the
				shareholders.
(f) Except
				as provided in subparagraph (3)(e) of this regulation, when the taxpayer is a
				pass-through entity which has no income tax liability of its own, the tax
				credits will be considered earned by its members, shareholders, or partners
				based on their profit/loss percentage at the end of the year and the
				limitations of subparagraph (3)(d) of this regulation. The donation is made by
				the pass-through entity but all credit forms (preapproval, claiming, and
				reporting) will be filed in the name of its members, shareholders, or partners
				and the credit can only be applied against the shareholders', members', or
				partners' tax liability on their income tax returns. The pass-through entity
				shall provide all necessary information to the recipient so that the
				preapproval, claiming and reporting forms can be filed in the name of its
				members, shareholders, or partners.