2. Georgia Tax Credits
• Georgia offers a range credits that enable companies
to minimize or completely eliminate their income tax
• Some credits based on the “tier status” of the
community
• Credit opportunities exist for individuals
– Directly available
– Pass through investment
– Purchased
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3. Film and Entertainment Credits
• Purpose: Entice film and game producers to come to
Georgia
– Additional benefits obtained from 2014 legislation for
game development
– Future legislation
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4. Film and Entertainment Credits
Film Production Company
– Provided 20% tax credit on qualified expenditures
• $500,000 minimum expenditures (i.e. labor, materials
services)
– Additional 10% credit for use of Georgia promotional
logo in finished production
– Obtain credits upon completion of production
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5. Film and Entertainment Credits
Film Production Company
– May sell credits in multiple blocks
– One time transferability
– Obtains comfort letter or state certified audit
– Recognizes income on the sale of the credits
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6. Film and Entertainment Credits
Taxpayers
• Purchase credits through broker or CPA assistance
• Rates vary - $.86 - $.91
• Form IT-TRANS
• Deemed to be paid ratably over year
• Carry forward - 5 years
• Short term capital gain recognition on federal return
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7. Film and Entertainment Credits
Taxpayer Considerations
– Timing of purchase and use of credit
– Timing of deduction for state tax paid
– Capital gain recognition
– Holding period
– Risk/transferability
– Risk
• Comfort letter
• State certified audit
• Recapture
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8. Low Income Housing Tax Credit
• Purpose: To encourage the development of low
income housing in Georgia
– 15 states currently offer housing credits
– Georgia
• 2001 - Adopted credit
• 2003 – Credits first available
• Allows bifurcation of state credits from federal credit
– Available to individuals, corporations or trusts
– Beneficial regardless of AMT position
• Larger benefit for AMT taxpayers
– Carry forward – 3 years
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9. Low Income Housing Tax Credit
Taxpayer
– Purchase through broker or CPA assistance
– Investment in entity taxable as partnership
– Receive K-1 with allocation of credits
– Attach K-1 to Georgia return
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10. Low Income Housing Tax Credit
Taxpayer Considerations
– Rates vary $.75 - $.85
– BUY EARLY for lower rates
– Consider tax position and time value of money
– Years required in investment
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11. Georgia Education Expense Credit
• Purpose
– Allows parents
• To seek a private K-12 school that provides the best education they
can find
• Obtain a scholarship to prevent financial barrier for obtaining
education for the child
• Maximum annual scholarship capped at per pupil cost in Georgia
public schools $8,983 for 2014
– Allows Taxpayers
• Contribution to non-profit K-12 scholarship organization in
exchange for a state tax credit
• May designate the private school where contribution is used
• May not designate the child the scholarship is awarded to
• 125 participating schools
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12. Georgia Education Expense Credit
– Individual and corporate taxpayers receive Georgia
income tax credits for contributions to qualified
student scholarship organization (SSO) up to:
• $1,000 (single)
• $2,500 (married filing jointly)
• $10,000 (individuals with ownerships in S Corp, LLC or
partnership)
– Contributions are also eligible for federal income tax
deduction but added back for Georgia taxable income
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13. Georgia Education Expense Credit
New for 2013
– Owners of S-corps, LLCs and Partnerships allowed
contribution of $10,000
• If both spouses earn income from pass through entities
- each can contribute up to $10,000 ($20,000 in total)
– May select which pass-through entities to include
when computing Georgia income
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14. Georgia Education Expense Credit
– May combine all Georgia income, loss and expense
regardless of ownership in multiple entities
– May combine W-2 income from the pass-through as
well as K-1 income
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15. Georgia Education Expense Credit
Economic Cost or Economic Benefit
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Single taxpayer - $1,000 maximum deduction
Standard deduction $0 maximum cost
Itemized deduction $60 maximum cost
Alternative minimum tax $290 possible maximum economic benefit
Married Filing Jointly - $2,500 maximum deduction
Standard deduction $0 maximum cost
Itemized deduction $150 maximum cost
Alternative minimum tax $725 possible maximum economic benefit
Individual member of LLC shareholder of S corporation or Partner in Partnership $10,000 max
donation
Itemized deduction $600 maximum cost
Alternative minimum tax $2,900 possible maximum economic benefit
16. Georgia Education Expense Credit
– Corporate limitation to 75% of tax liability
– Trusts may not pass credit through to beneficiaries
– Carry forward provisions
– Payment within 60 days of approval
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APPLY EARLY!!!!
17. Retraining Tax Credit
• Purpose
– Foster profitability and competitiveness of existing
Georgia businesses
– Encourages workforce development
– Offset costs of retraining employees
• Implementation of new equipment
• New technology
• Operating systems
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18. Retraining Tax Credit
• Available credit
– One half of the direct cost of retraining
– Up to $500 per approved training program per year for
each employee; may not exceed $1,250 per year per
full-time employee
– Up to 50% of the tax liability
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19. Retraining Tax Credit
• Eligible retraining programs
– Newly installed equipment
– Newly implemented technology
• Computers
• Platforms
• Software implementations and upgrades
• Total quality management
• ISO 9000
• Self directed work teams
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20. Retraining Tax Credit
• Programs that are not eligible
– Executive training
– Management development training
– Career development
– Personal enrichment
– Cross training of employees
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21. Retraining Tax Credit
• Eligible costs
– Instructor salaries
– Employee wages during the retraining
– Development of retraining program
– Materials and supplies
– Instructional media
– Equipment used for retraining (not production)
– Reasonable travel costs
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22. Retraining Tax Credit
• Costs that are not eligible
– Sales taxes
– Training space
– Employee paid training
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23. Retraining Tax Credit
• Eligible employees
– Georgia residents
– First line employees or immediate supervisor
– Continuously employed with company for minimum
16 weeks
– Full time employees (25+ hours per week)
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24. Retraining Tax Credit
– Carry forward – 10 years
– Training over multiple years are claimed based on the
costs incurred for each year
– Prior year training may be also approved
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25. Retraining Tax Credit
• Administration
– Technical college system of Georgia
• Fulton – Atlanta Tech. Gwinnett Tech
• DeKalb – Georgia Piedmont Tech
• Gwinnett – Gwinnett Tech
– Vice President of Economic development determines
eligibility and if documentation is adequate and
complete
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26. Retraining Tax Credit
• Procedures for Approval
• Documentation requirements
– Description of changes or new equipment
– Purpose/objectives
– Employees
– Qualification of training provider
– Employee performance evaluation
– Training outline
– Hours, costs incurred
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27. Job Tax Credit
• Available to new and expanding companies in certain
industries
– Manufacturing
– Warehousing and Distribution
– Processing
– Telecommunications
– Broadcasting
– Tourism
– Research and Development
– Biomedical Manufacturing
– Services for the elderly and Persons with Disabilities
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28. Job Tax Credit
– Based on calculation of increase in headcount
– Calculate per location
– Credits may be applied against
• Income tax liabilities or
• Withholding tax (limited)
– Utilizes “county tier” based on
• Unemployment rate
• Per capita income
• Poverty rate
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30. Job Tax Credit
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Tier Credit (for 5yrs) Min New Jobs Use of Credit Carry Forward
1 $4,000* 2 100% tax/withholding 10 years
2 $3,000* 10 100% tax liability 10 years
3 $1,750* 15 50% tax liability 10 years
4 $1,250* 25 50% tax liability 10 years
MZ/OZ $3,500 2 100% tax liability 10 years
LDCT $3,500 5 100% tax liability 10 years
* Includes $500 bonus for Joint Development Authority
MZ = Military zone
OZ = Opportunity zone
LDCT = Less Developed Census Tract
31. Job Tax Credit
• Year 1 establishes 5 year period
• Additional credits are accrued for additional jobs in
years 2-5
• Jobs created outside of year 5 must meet new
threshold for job creation
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32. Job Tax Credit
• Special Zones
– Less Developed Census Tract (LDCT)
– Opportunity Zones (OZ)
– Military Zones (MZ)
• Additional benefits
– Eligible for $3,500 tax credit
– Use against 100% of tax liability
– Excess credit applied to payroll withholding
– Available to all businesses including retail
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33. Job Tax Credit
• Employee qualifications
– Full time employees
– Offered health insurance benefits similar to existing
employees
– Pay more than average wage of county with the lowest
average wage in state ($426/week for 2014)
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34. Job Tax Credit
Example
Facts: In Year 1, Create-It Corp has three locations.
It increased its headcount by
– Location #1 – 50 in Macon County (Tier 1)
– Location #2 – 30 in Gwinnett County (Tier 4)
– Location #3 – 20 in Gwinnett County (Tier 4)
In Year 2 an additional 3 employees were added at
location #2.
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What is the amount of credit earned by Create-it Corp?
35. Job Tax Credit
Determination is based on location NOT county
Location #1 – 50 jobs x $4,000 x 5 years = $1,000,000
Location #2 – 33 jobs x $1,250 x 5 years = $206,250
Location #3 – Does not qualify for credits
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36. Investment Tax Credit
• Available to manufacturers and telecommunications
businesses
– Operate in Georgia for 3 years
– Investment of $50,000 minimum
• Planned Project
– Planned purchases
– New facility or expansion of existing facility
– Directly related to taxpayer’s manufacturing
– < 3 years
– Results in expansion of asset base
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37. Investment Tax Credit
• Qualified capital investments
– Land acquisition
– Improvements
– Buildings
– Machinery & Equipment
– Leased equipment may be eligible
• Purchases not qualified
– Safety items
– Materials used in repair, refurbishment
– Furniture
– Computer hardware or software
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38. Investment Tax Credit
• Credit based on county tiers
– Tier 1 – 5%
– Tier 2 – 3%
– Tier 3 – 2%
– Tier 4 – 1%
• Recycling or pollution control equipment (3%-8%)
• Optional investment tax credit
– Purchases from $5 - $20 million
– Range 6% - 10%
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39. Investment Tax Credit
• Application due within 30 days of the completion of
the project
• Project - < three years
• 50% tax offset
• 10 year carry forward
• Generally can not be combined with
– jobs credit
– optional investment credit
– headquarters credit
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40. Port Tax Credit Bonus
• Eligible taxpayers
– Increase import/export by 10% through Georgia ports
– Claimed jobs credit or investment credit
• Credit available
– Additional $1,250 per job up to 5 years
– Increased investment credit rate to Tier 1 status (5%)
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41. Quality Jobs Tax Credit
• Eligible taxpayers
– Establish or relocate 50 new jobs within one year
• Credit available
– Range between $2,500 - $5,000
– Based on the wages paid to employees compared to
county average wage
– Claimed for 5 years
– Apply to 100% of tax liability and payroll withholding
– Carry forward – 10 years
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42. Low Emission / Alternative Fuel Credit
Alternative Fuel Credit
• Eligible taxpayers
– Purchase of alternative fuel heavy-duty and medium-duty
vehicles
– Purchases between July 1, 2015 and June 30, 2017
– Purchase and registration occurs in Georgia
• Credit available
– Equal to amount of purchased vehicle
• $20,000 per heavy-duty vehicle
• $12,000 per medium-duty vehicle
• Capped at $250,000
– NO Carry forward
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43. Low Emission / Alternative Fuel Credit
• Heavy duty vehicle – > 26,001 pounds
• Medium-duty vehicle – 8,500 - 26,000 pounds
• Fuel usage
– 90% alternative fuel
– 10% or less gasoline
• Application required for approval of credit
• State cap $2.5 million for each fiscal year
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44. Low Emission / Alternative Fuel Credit
Low emission vehicles
• Credit available
– 10% or vehicle cost or $2,500 per low-emission vehicle
– 10% of vehicle cost or $5,000 per zero-emission vehicle
• Credits also available for
– Conversion of conventionally fueled vehicles
– Purchases of electric vehicle chargers
• Claim up to 100% of tax liability
• Carry forward 5 years
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45. Child Care Tax Credit
• Eligible taxpayers
– Purchase or build qualified child care facilities or
– Provide or sponsor child care
• Credit available
– 75% of employer’s direct cost
– May claim up to 50% of tax liability
– Carry forward 5 years
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46. Other Tax Credits
• Research and Development credit
– 10% credit of increased R&D expenses
• Qualified Health Insurance Expense Credit
– $250 credit per employee
• 50 or fewer employees
• Provide high deductible health plan under IRC
Section 223
• Taxes paid to other states (Individuals)
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47. Other Tax Credit Considerations
Assignability of credit
• Member of affiliated group under IRC section 1504
• Entity affiliated with an entity which
– Owns or leases the land
– Provides capital for construction of project and
– Is grantor or owner under a management agreement
with the managing company
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48. Other Tax Credit Considerations
Assignability of credit
• No carryover of previously claimed credits may be
assigned
• Remaining carryover transferred back if member
leave affiliated group
• Election must be filed
• Irrevocable election
• Jointly liable
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49. Other Tax Credit Considerations
Application for refunds
Credits must be claimed within one year of the
earlier of
– Date the original return was filed
– Date return due including extension
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