Georgia School Choice Scholarship Fund

Our daughter is almost 2 years old. Being new to the US educational system, we have been spending a great deal of time researching about various educational options. There are quite a few number of options to choose from such as public schools, private schools, or homeschooling. Our research has led us to believe that foundational years are very crucial for child's development. We are a firm believer in well-rounded intellectually challenging education. Therefore, we have narrowed our choice down to a private Montessori school in our area that fits the bill.

During this research process, we also came to know about a Georgia School Choice Scholarship Fund program that allows Georgia individual taxpayers and businesses to redirect their state income tax dollars (up to a limit) to eligible private schools. The private school will receive the redirected money as a donation to its scholarship fund and will disburse it to its eligible students. Different schools have different policies for financial aids, so be sure check for a policy before you make the donation. The true intent of the program is to level the playing field for poor families who wouldn't otherwise be able to afford to send their kids to private schools. In all, Georgia taxpayers can claim $50 million in tax credits for donations to scholarship organizations on a first-come, first-served basis.

How Georgia School Choice Scholarship Program Works

Step 1: Contact School

Contact your private school where you wish to donate the money and ask them if they have any tie-ups with any of the non-profits that were set up to manage donations to this programs. These non-profits are also called as  SSO (Student Scholarship Organization). Most private schools have set up ties with such organizations as their process is greatly simplified by having someone else to manage the paperwork.

Step 2: Visit the Non-Profit Website

Visit the SSO's website. You will be directed to fill out a pre-approval form. This form is known as Qualified Education Expense Credit Pre-approval Form and is named Georgia Form IT-QEE-TP1. Some SSO's have streamlined this form and allow you to fill it out online and some SSO's ask you to download and mail the form. Yet, some SSO's will redirect you to fill out this form on the Georgia Department of Revenue's website directly. Be sure to read instructions from the SSO as to where this form needs to be mailed or filled out online.

Step 3: Wait for the Pre-Approval

Once the form has pre-approval form has been filled out, you will need to wait to hear back an approval from the Georgia Department of Revenue. This approval make take up to 30 days. You will receive a letter from GADOR stating the approval.

Step 4: Donate the Money

Generally speaking, within 30 days of the pre-approval notice, donors must make their contributions to an SSO. This donation must be made by the end of the same calendar year in which the donation was pre-approved in order to get tax credit for that year.

Step 5: Notify the School

SSO will notify the details about the donor and will also disburse the funds. Just to be sure, you may want to notify the school of your donation.

Step 6: Apply for Financial Assistance with the School

In this step, as per the process of your school,  you will need to apply for financial assistance with the school. Depending on the school, you will be directed you to third parties that manage this process. Also, depending on school policies, financial assistance is merit based, need-based, and any specific criteria of their choosing. Be sure to inquire about this at your school.

Step 7: State & Federal Tax Filing

This program allows Georgia taxpayers to take a dollar-for-dollar credit on state taxes for contributions to SSOs that fund tuition scholarships. When you file your Georgia income tax return, complete Form IT-QEE-TP2 and include it with your return. Georgia DOR will NOT permit you to take both a tax credit and a charitable income tax deduction. Therefore, you must add back the amount of the tax credit to your Federal Itemized Deductions on your Georgia tax return. Depending on your tax liabilities, you will receive credit for the amount you donated to the scholarship fund. Plus, you will get income tax deduction on your federal taxes for charitable taxes.

How Much Can I Donate

A single taxpayer can donate up to $1,000. A married couple filing jointly can donate up to $2,500. A “C” corporation can donate up to 75% of their Georgia tax liability.

What If I Don't Owe Much Taxes

If you don't owe much income taxes to Georgia, then you have two choices. Donate the amount that is equivalent to the taxes you expect to owe in that year. If you owe $1000 in Georgia taxes, then donate only $1000. The other option is to donate the full amount and carry carry the excess forward for five years.

Can Friends, Family, and Business Donate

You can ask your friends, family, and businesses you know to contribute to your child's private school scholarship program. Your child will receive credit the program receives in donation depending on their policies. This is an excellent way for family members to support their loved ones and get a federal tax deduction at the same time.