What is the history and purpose of the new tuition tax credit legislation?
In 2008, the Georgia General Assembly passed House Bill 1133 and Governor Sonny Perdue signed it into law. The law provides for the creation of student scholarship organizations ("SSOs") that use Georgia income tax credit-eligible contributions to provide public school or pre-k4, kindergarten or first grade eligible students with the opportunity to attend private schools. Georgia SSO is one of the SSOs created to implement the law.
How does the tax credit work?
A taxpayer redirecting all or a portion of his or her Georgia income tax payments to Georgia SSO and designating a participating school receives an income tax CREDIT against their Georgia income taxes for the amount of their contribution. Thus, if a married couple filing a joint return owes $6,000 of Georgia income taxes and makes the maximum contribution to Georgia SSO of $2,500, they will only have to pay $3,500 of income taxes to the state of Georgia.
What is the maximum amount of Georgia income taxes that an individual can redirect each year to Georgia SSO?
Each calendar year, as long as there is room available under the $100 million annual cap on tax credits established by HB 1133, a married couple filing a joint return can redirect up to $2,500 of their income tax payments to Georgia SSO. The maximum for an individual is $1,000.
If an individual has paid all of his or her estimated Georgia income taxes for a particular tax year and makes a contribution to Georgia SSO in that year, will he or she still receive a Georgia income tax credit for the amount contributed to Georgia SSO?
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.
Can corporations contribute to the Georgia Georgia SSO Scholarship Fund?
Yes, corporations can receive a tax credit for amounts contributed to the Georgia SSO Scholarship Fund. For "C" corporations, the tax credit is available up to 75% of their annual Georgia income tax liability. For "S" corporations, LLCs and Partnerships, the credits are only available up to the lesser of the entity tax liability or $10,000.
If I redirect some of my Georgia tax payments to Georgia SSO, can I designate the student who will benefit from the financial assistance?
No. Although a donor to Georgia SSO may designate a participating school, the IRS prohibits the direction of gift to an individual. SSO gift awards are determined by the financial aid committee at the school based on demonstrated need. Each school will have the discretion of deciding which qualified recipients will be recommended to Georgia SSO for the receipt of the these scholarships.
What is the deadline for making contributions that qualify for the tax credit? How is the contribution made?
In order to contribute to Georgia SSO for a tax credit, an individual or corporation must first receive pre-approval from the Georgia Department of Revenue (DOR). The Forms needed for the pre-approval process are available on Georgia SSO's website, and the school and Georgia SSO will assist you in managing the paperwork and pre-approval process. When submitting your paperwork to the school, you will also write a check equal to your contribution amount made out to "Georgia Student Scholarship Organization, Inc." Be sure to designate the school in the memo section of the check. Your check will be held by either the school or Georgia SSO until your approval Form has been received from the DOR. All contributions to Georgia SSO must be made prior to the end of the applicable calendar year.
Will a school modify their admission criteria to accommodate students who would qualify for Georgia SSO scholarships but not qualify under the current admission criteria the school?
No. All applicants will be required to have completed the regular application for admission. Acceptance for admission will be based on the current standards and criteria for admission to the school. Exceptions will not be made for applicants who are eligible for a Georgia SSO scholarship. The program simply allows for families with qualified students who had not previously been able to attend the school to do so. Admission standards will not be relaxed.
How does a family apply to receive financial assistance from the Scholarship Fund?
The school will explain the availability of the Scholarship Fund in the financial aid information packet distributed to interested applicants to the school. Any applicant family interested in receiving a Georgia SSO scholarship merely needs to express such interest to the admissions office. They will then be asked to provide proof of their child's enrollment in a public school or eligibility to enter pre-k4, kindergarten, or first grade. The family will also be required to submit the first two pages of their signed federal income tax return for the prior year. If the applicant family is approved for a Georgia SSO scholarship, the family, the school, and Georgia SSO enter into a Georgia SSO Scholarship Agreement.
After a school awards Georgia SSO scholarships in a particular year, what happens to any remaining Georgia SSO funds that have been designated for use at the school?
Under the terms of the Georgia SSO School Participation Agreement entered into between Georgia SSO and the school, any unused funds that have been designated for use at the school are held by Georgia SSO in an account earmarked for the school. The designated funds (together with any net income earned on the account) are available for providing ongoing financial aid to existing Georgia SSO scholarship recipients at the school and for awarding future Georgia SSO scholarships at the school.
Is the Georgia SSO a government agency? What is its role?
No. Georgia SSO is an independent 501(c)(3) tax-exempt organization.Georgia SSO, 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, Georgia SSO serves as an information clearinghouse; provides information and insights regarding the marketing aspects of the tuition tax credit legislation; monitors legal and regulatory developments; shares best practices among the 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 schools such as those participating in the Georgia SSO Scholarship Fund.