Georgia’s Tax Credit Secret: The Qualified Foster Child Donation

by: Dailey Dewling
Verified by: CPA

November 2, 2023

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Georgia taxpayers have enjoyed the opportunity to take advantage of several tax credit opportunities in recent years. Among the best-known examples are the Georgia GOAL credit and the Georgia HEART credit, which allow taxpayers to redirect their tax dollars to private schools and rural hospitals respectively. 

In 2023, several new tax credits were launched, including the Georgia Qualified Foster Child Donation Tax Credit, which allows taxpayers to direct their tax dollars to qualified organizations that support foster children. To date, this credit has received relatively little publicity, and as a result, close to 95% of the available funding remains unused as we enter the last quarter of the year. 

At Smith + Howard, we work closely with several organizations that do extremely important work in our community and stand to benefit from this tax credit. Today, we’re spotlighting them and the work they do, while outlining exactly how Georgia taxpayers can apply for this tax credit. 

An Overview of the Qualified Foster Child Donation Credit in Georgia

The Qualified Foster Child Donation (QFCD) Credit, also known as the Fostering Success tax credit, allows Georgia taxpayers to direct their state income and pass-through entity tax dollars toward organizations assisting children in foster care across Georgia.  

Taxpayers receive a dollar-for-dollar reduction in their state tax liability. Taxpayer’s tax liability remains unchanged – however, both individuals and businesses can use this credit to direct their tax dollars to support causes close to their hearts. 

There are several of these tax credits available, from the GA GOAL and HEART credits mentioned above to the newly-introduced Qualified Law Enforcement Donation Credit. Taxpayers are actively using these credits, but many are unaware of the QFCD Credit, which has received comparatively little media coverage. 

$20 million is available for taxpayers to direct towards qualified foster child organizations, but as of 9/29/23, just over $1 million of the funds set aside had been claimed. The application process is simple. If you’re interested, continue reading to learn how you can support organizations doing important work across Georgia or reach out to your trusted Smith + Howard advisor

How to Apply for the Georgia Qualified Foster Child Donation Credit

The process of applying to use the QFCD is relatively straightforward. 

Taxpayers must apply for pre-approval through the Georgia Tax Center website. At this stage, they specify the amount they would like to apply for and the qualified organization they would like to donate to. Currently, approvals take around a week to process, after which point, the taxpayer can directly send funds to the qualified organization. 

The taxpayer sends funds directly to the chosen foster care organization and they will receive a form acknowledging their contribution in return. Taxpayers will then attach a form reporting their donation to their state tax return. It’s a simple process that’s designed to make it easy for taxpayers to support causes close to their heart.

During the first six months of the year, there are limits to the credits that can be sought. After June 30, as tax credits remain available, approved individual taxpayers are permitted to make unlimited contributions to qualified entities in return for a corresponding 100% Georgia income tax credit. 

For the period beginning on January 1 and ending on June 30 of each year, the following limits apply:

  • Individual Filer – up to $2,500
  • Married Filing Jointly – up to $5,000 
  • C Corporation, Trust, or Pass-Through Entity electing to pay tax at entity level – up to 10% of Georgia Tax Liability
  • Individual Owner of S-Corp, LLC, or Partnership (Pass-Through Entity) NOT paying tax at entity level – up to $5,000

By leveraging the QFCD, taxpayers can support organizations doing extremely important work with disadvantaged children in their communities. At Smith + Howard, we’re proud to work with several of these organizations. 

Qualified Foster Child Organization Spotlight: Multi-Agency Alliance for Children

The Multi-Agency Alliance for Children (MACC) works closely with children who have experienced the foster care system in Georgia. Once these children turn 18, they age out of the system but lack the support that children who grew up in traditional homes have access to. 

These young adults often struggle with finding employment and pursuing higher education, and are proven to experience significantly higher rates of homelessness. MACC aims to fill the gaps in the foster care system, providing training and resources for teenagers and young adults aged between 14 and 25. 

Here’s what a Smith + Howard employee had to say about the work of MACC:

“When reviewing MAAC’s mission statement, I was struck by how it affected me. To me, learning how MACC identified and serves an under-addressed need through official channels to stabilize these youth’s lives and futures was extremely impactful.

Working with MAAC helped me understand that our work at Smith + Howard wasn’t just filing compliance returns for corporations and individuals. MAAC’s tax filings were a direct reflection of the benefit an organization can have to a community needing aid. Reading about the number of people impacted by the organization was strikingly different from reading the typical numbers on a company’s financial performance. 

MAAC’s participation in the new Qualified Foster Child Support Organization educates the greater Georgia community about the benefit MAAC provides while also providing donors with additional opportunities to provide funding to support their programs.”

Learn more about MACC’s work here

Qualified Foster Child Organization Spotlight: CHRIS 180

CHRIS 180 has a proud history of serving foster children experiencing mental health issues. Foster children have limited access to any form of mental healthcare, but are far more likely to have experienced trauma and need this kind of support. 

CHRIS 180 focuses on supporting foster children who have experienced trauma, providing on-site psychologists and counselors to provide trauma-informed mental healthcare. Plus, they’re one of the first organizations to address the challenges that homeless children in the LGBTQ+ community face. 

Here’s what a Smith + Howard colleague had to say about CHRIS 180:

“CHRIS 180 operates out of my neighborhood. In a way, this makes me appreciate their work even more than I already did. Their focus on trauma-informed health services is vital, as in far too many instances, foster children’s trauma is ignored and overlooked. 

Near and dear to my heart is their work with homeless youth in the LGBTQ+ community. Children in this community are far more likely to end up homeless and are at greater risk of sex trafficking. As someone whose family was not accepting of their orientation, this work hits home.”

Learn more about supporting CHRIS 180 here

Explore Tax Credit Opportunities with Smith+ Howard

At Smith + Howard, we’re passionate about helping our clients redirect their tax dollars to the causes near and dear to them. There is a wide range of opportunities, from the QFCD outlined here to programs such as GRACE which support access to Catholic schools. 

Each credit has slightly different contribution limits. To learn more about how you can redirect your Georgia tax dollars to causes close to your heart, contact Smith + Howard today. Our experienced tax professionals can help you understand your options, walk you through the process, and help you make any required applications or filings. 
Contact a Smith + Howard advisor today

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