June 30 Deadline Approaches to Take Advantage of Georgia HEART Tax Credit

print July , 2018

The Georgia HEART (Helping Enhance Access to Rural Treatment) program awards Georgia income tax credits to taxpayers who contribute to qualified rural hospital organizations located in Georgia. Much like the Georgia income tax credits for School Scholarship Organizations, the amount available for tax credits is limited and has a filing deadline. That deadline is June 30 and is fast approaching.

You and/or your business may be able to take advantage of these credits. Here’s what you need to know:

What’s the Advantage for Me?

The HEART credit can help offset your state income tax liability. For instance, if you are a married couple, filing jointly and your state tax liability is $9,000, the credit would allow you to offset your liability by donating $9,000 (or the amount available when all applications are submitted – see below) to a qualified rural hospital organization (RHO).

For high income wage-earners, the benefit is extended to your federal tax return, as you are able to claim it as a charitable contribution on your federal return. A cautionary note for the future, however: the IRS as recently as May 23, 2018 expressed its intent to “crack down” on states that seek to find ways around the new limit on state and local tax deductions limits from the Tax Cuts & Jobs Act.

Each year – from 2018 through 2021, Georgia taxpayers can access $60 million of RHO tax credits, with each qualified RHO having access to $4 million of tax credits (until the total annual $60 million cap is met). During the first six months of each year, a qualified RHO may only accept $2 million of corporate contributions and $2 million of individual contributions.

Who Can Take the Credits and for How Much?

From January 1 through June 30 of each taxable year, the following limits apply with respect to Georgia HEART RHO contributions:

  • In the case of a single individual or a head of household, a 100% Georgia income tax credit for contributions to RHOs, up to a limit of $5,000;
  • In the case of a married couple filing a joint return, a 100% Georgia income tax credit for contributions to RHOs, up to a limit of $10,000; and
  • An individual who is a member of a limited liability company, shareholder of an “S” Corporation, or partner in a partnership (pass-through entities) is allowed a 100% Georgia income tax credit for up to $10,000 of the amount they contribute to a RHO, so long as they would have paid Georgia income tax in that amount on their share of taxable income from the pass-through entity.
  • A “C” Corporation or trust shall be allowed a 100% Georgia income tax credit for contributions to RHOs equal to the amount of the contribution, or 75 percent of the corporation’s or trust’s income tax liability, whichever is less.

What Happens After June 30?

After June 30 of each year, for so long as a portion of the $60 million annual cap on RHO tax credits is available, individual taxpayers may make unlimited contributions to RHOs for a corresponding 100% Georgia income tax credit to offset their Georgia income tax liability.

On or before May 15 of each year through June 30, individual taxpayers will be able to make a HEART Appointment to authorize Georgia HEART to submit their post-June 30 tax credit pre-approval forms with the DOR.

How Do I Get the Credit?

For a step-by-step process, use this link. You will need to complete a short form that includes your filing status, basic personal information (name, address, etc.). You will need to select the RHO (rural hospital organization) you’d like to direct your contribution to (or have the state select for you), and then agree to make the contribution within 60 days of being notified.

Taxpayers who are filing to take various state credits (including the Georgia HEART credit) must file electronically. Smith & Howard already files client tax returns – both federal and state – electronically. If you self-file, you’ll need to be sure to do this.

Note: while the maximum is $10,000 for a married couple filing jointly (for instance), the actual amount of the donation (and therefore, the tax credit available to you) is dependent on how many apply for and receive authorization for the tax credit. If enough taxpayers apply, the required donation (and income tax credit) could be less than $10,000.

If you miss the June 30 deadline, you can apply for any remaining portion of the $60 million pool on July 1 and later. Visit this link.

While taxpayers must file online individually, as questions arise about your particular situation, please reach out to Mark Abrams or anyone on our tax team at 404-874-6244.

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