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!
oXYGen Financial, Inc. co-CEO Ted Jenkin is one of the foremost knowledgeable professionals in giving financial advice and Smart Money Moves to the X and Y Generation.
Phone 1.800.355.9318 or 770.777.0427
Securities and Investment Advisory Services offered through NFP Advisor Services, LLC (NFPAS), Member FINRA/SIPC. Oxygen Financial is not affiliated with NFPAS. NFPAS does not provide tax or legal advice. This site is published for residents of the United States only. Registered Representatives and Investment Advisor Representatives of NFP Advisor Services, LLC (NFPAS) may only conduct business with residents of the states and jurisdictions in which they are properly registered. Therefore, a response to a request for information may be delayed. Not all products and services referenced on this site are available in every state and through every representative or advisor listed. For additional information, please contact NFPAS Compliance Department at 512-697-6000. PLEASE NOTE: The information being provided is strictly as a courtesy. When you link to any of the web sites provided here, you are leaving this web site. NFP Advisor Services, LLC makes no representation as to the completeness or accuracy of information provided at these web sites. Nor is NFP Advisor Services, LLC liable for any direct or indirect technical or system issues or any consequences arising out of your access to or your use of third-party technologies, web sites, information and programs made available through this web site. When you access one of these web sites, you are leaving our web site and assume total responsibility and risk for your use of the web sites you are linking to.