Starting July 1, 2018, You May Be Eligible for A Substantial Income Tax Reduction
Donating money to charitable causes is good. Tax credits are good, too. Especially when the Georgia HEART Hospital Program combines the two in a way that helps you help rural and critical access hospitals in Georgia while reducing your tax obligation – possibly by quite a bit. Georgia governor Nathan Deal recently signed a bill into law that makes $60 million available for this worthy endeavor.
This is how the program works – you donate money to a qualified Rural Hospital Organization (RHO), each of which is allowed to receive up to $4 million for this program during the 2018 tax year and every year through 2021. Your donation gets converted into a tax credit which, as you know, is better than a deduction.
Two Compelling Motivators
Though you would have been eligible to take advantage of this program for the 2017 tax year, you may be especially interested in 2018, for two reasons.
First, the Tax Cuts and Jobs Act, passed last December and in effect for the current tax year, limits the dollar amount you can deduct for state and local income taxes (SALT) combined with property taxes to $10,000.
Second, the program was modified by recent Georgia legislation that passed last March. Previous limits on the tax credits were increased, so taxpayers will benefit more from their donations. From now until June 30, 2018, these are the limitations:
- Single individuals and heads of households can get tax credits equal to 100 percent of their donations OR $5,000 per tax year (whichever is less).
- Married couples filing joint returns can claim 100 percent OR up to $10,000 per tax year.
- Pass-through entities, like S Corporations or LLCs, are subject to the same maximum amounts enforced for single or married filers. Companies and individuals using these tax structures, “…specifically qualify as eligible contributors.”
- C Corporations or Trusts can apply for tax credits equal to 100 percent of their contributions OR 75 percent of their Georgia income tax liability (whichever is less).
Beginning July 1, 2018, though, there will be no maximum credit limit for non-corporate contributions to RHOs – assuming the $60 million cap has not been reached. This could result in significant tax savings for you.
This is innovative legislation, and we encourage you to consider taking advantage of it – as soon as possible if you’re planning to. The process takes some time, and there’s no way to know when the $60 million ceiling will be hit.
You’ll have to fill out a Georgia HEART Hospital Program pre-application form first; you can find it here. Before you even take that step, though, talk to us. Taking this credit will complicate your 2018 taxes. We can help you start planning now, creating the reports you need and analyzing them so you can make decisions the rest of the year that will be financially advantageous to your business when tax preparation time rolls around.