One of 50 Ways to Lower Your Taxes: The Georgia Private School Tax Credit

By Marc Lewyn   |   March 24, 2014

This week, I had the incredible privilege of hearing the famed songwriter Paul Simon speak and attending a dinner in his honor at Emory University. My favorite Paul Simon song has always been “50 Ways to Leave Your Lover.” Translating that theme to my professional life, I can think of at least 50 ways you can profit by giving it away. So, with apologies to Mr. Simon, let’s make a new plan, Stan, and get yourself free.

Created under the auspices of the Georgia Department of Education, the Georgia Private School Tax Credit (see O.C.G.A. § 20-2A-1 to § 20-2A-7) allows eligible private citizens and corporations to receive tax credits for donations to Student Scholarship Organizations (SSOs). SSOs will provide student scholarships to parents of eligible children who plan to attend private, nonprofit schools.

Pre-approved individuals can give $1,000, and married couples filing jointly can give up to $2,500. Further, an individual who is a member of an LLC, a shareholder of an S Corporation, or a partner in a partnership may donate up to $10,000 as long as they owe at least that amount in Georgia taxes, and C Corporations can donate up to 75 percent of their total Georgia tax liability. That means that if your company has a $100,000 Georgia tax liability, you potentially could receive a $75,000 tax credit!

So how is this “profitable?”

  1. You claim any of these amounts as Georgia tax credits – not mere deductions – against your state tax. That means that if you donate a dollar, you save a dollar.
  2. You may also be able to deduct the donation from your federal taxes, providing additional savings.

So … the combination of the state tax credit plus the federal tax deduction means that you actually could make a profit by donating to a Student Scholarship Organization.

What happens to the money? You cannot direct the funds to a student of your choice, but it may be that donating to a specific SSO would give your child’s school greater financial flexibility in what it can do indirectly for your child. For example, the school may be able to hire more or better teachers since it does not have to fund scholarships. Or, perhaps they will be able to build that new basketball court for your child to enjoy.

Georgia law limits how many of these tax credits can be claimed each year, generally about $58 million. In 2013, Georgia taxpayers gobbled up all the available tax credits by May. So, if this idea is one you want to consider, you have to act fast to obtain tax credits against your 2014 tax liability.

We are not accountants so we cannot give you tax advice. A skilled tax professional should be able to advise you on whether this program makes sense given your unique tax situation; if so, he or she can also help you obtain the required pre-approval from the Georgia Department of Revenue.

As Paul Simon might sing it,

The answer is easy if you
Take it logically
I’d like to help you in your struggle
To be free
There must be fifty ways
To lower your taxes.

Marc Lewyn

About the Author

Marc Lewyn is a partner, senior financial advisor, and CEO of Strategic Liquidity Services ("SLS") at JOYN. SLS provides a methodology designed to help business owners navigate the complex options available for generating liquidity from their businesses. Marc also hosts “Diversify Your Wealth Beyond Your Business,” a “Ted Talk” style workshop for Atlanta business owners. Learn more / RSVP here.

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