Paying state taxes keeps our state government running, our public K-12 schools open, our parks green and safe, and our roads paved. Our taxes also fund public assistance programs like Medicaid, Children’s Health Insurance Programs and provide assistance for low-income families.
However, did you know there is a way to direct the money you’d pay in state income tax to fund rural hospitals in Georgia and get credit for a charitable donation on your federal returns?
Enter the Georgia’s Rural Hospital Tax Credit. Imagine your family has an $8,000 Georgia State income tax liability. You could offset that liability by making a donation to the Georgia HEART Program. Your $8,000 would go toward one of more than 50 rural hospitals in the state that have a financial need. Funds can be used by the hospital to renovate existing facilities or go toward any leg of the process in building a new treatment center, including market feasibility studies to payments on construction loans. There are many more options, but note that donated funds cannot be used for executive compensation.
In turn you would receive a dollar-for-dollar tax credit on your Georgia income tax liability. Furthermore, you would be eligible to take an $8,000 charitable deduction on your federal income tax return.
For high-income tax payers, this benefit was popular among those who were subject to alternative minimum tax. Going forward, this takes a state income tax deduction that the Tax Cuts and Jobs Act bundled with your property tax and limited to $10,000 and transfers it to a charitable deduction.
The Georgia Heart Hospital Program is limited to $60 million of income tax credits annually. The current credit is 90% of the donation. From January 1 through June 30 single filers or those who file as head of household can apply for up to $5,000 in rural hospital tax credits while married couples filing jointly can apply for up to $10,000 in tax credits. Provided the $60 million cap hasn’t been met, after June 30, taxpayers can make unlimited contributions and receive a corresponding income tax credit.
Furthermore, Gov. Nathan Deal recently signed a bill that will go into effect on July 1, 2018 through 2021 that makes the contribution a dollar-for-dollar tax credit. However, if by July 1, 2018 the relevant caps have not been reached, taxpayers who made a donation between Jan. 1, 2018 and June 30, 2018 will be allowed 100% of the donation that was used to arrive at the amount of credit allowed during that period.
Just because it is potentially available all year does not mean taxpayers should delay applying. You first apply through Georgia HEART (www.georgiaheart.org) through a short online form. You can choose the specific hospital you wish to benefit, or the Georgia HEART Program will designate one for you based on financial need. The Georgia HEART Hospital Program will handle the pre-approval process for you, submitting your application to the Department of Revenue. The approval process takes roughly 30 days. Once approved you have 60 days to submit your payment.
While this certainly seems like a win-win for both rural hospitals and taxpayers, you should consult your tax adviser or C.P.A. to ensure you receive the maximum benefit. If you donate more than your tax liability, unused tax credit can be carried forward up to five years.
If you have questions regarding the Georgia Rural Hospital Tax Credit, the experts at Henssler Financial will be glad to help: