Who Qualifies for the Georgia Low Income Tax Credit?
Georgia's Low Income Tax Credit provides state tax relief for working residents who also qualify for the federal Earned Income Tax Credit.
The Georgia Low Income Tax Credit provides a way for certain taxpayers to reduce their state income tax. This nonrefundable credit is aimed at individuals and families with limited earnings, offering financial relief by lowering the amount of tax they owe.
Determining Your Eligibility
The primary requirement is that your federal Adjusted Gross Income (AGI), which is calculated on your federal tax return, must be less than $20,000 for the tax year. This income ceiling is a firm cutoff; an AGI of $20,000 or more disqualifies a taxpayer from claiming the credit.
Beyond the income test, a taxpayer must not be claimed as a dependent on anyone else’s tax return. Residency status also plays a role; a person must be a Georgia resident at the end of the tax year to qualify, though this includes part-year residents who meet the year-end requirement. Certain individuals, such as inmates in a correctional facility, are explicitly ineligible for this credit regardless of their income.
Calculating the Credit Amount
The calculation of the Georgia Low Income Tax Credit results in a fixed dollar amount based on your specific federal AGI. Unlike some tax credits that are a percentage of other figures, this credit is determined by a tiered schedule. The amount of the credit decreases as income rises toward the $20,000 limit.
The credit amount is based on the following AGI tiers:
- A credit of $26 for an AGI under $6,000
- A credit of $20 for an AGI between $6,000 and $7,999
- A credit of $14 for an AGI between $8,000 and $9,999
- A credit of $8 for an AGI between $10,000 and $14,999
- A credit of $5 for an AGI between $15,000 and $19,999
This is a nonrefundable credit, meaning it can reduce your tax liability to zero, but it cannot be paid out as a refund if the credit amount exceeds the tax you owe.
How to Claim the Credit
Claiming the Georgia Low Income Tax Credit is a procedural step integrated into filing your state income tax return. The credit is specifically reported on Line 17 of Georgia’s Form 500, the Individual Income Tax Return. Taxpayers must complete the Low Income Credit Worksheet, found in the official Georgia Form 500 instructions, to determine the credit amount.
For those who use tax preparation software, the program will typically calculate the credit automatically and populate the correct line on Form 500 if you meet the eligibility criteria. It is important to note that any claim for this credit, whether on an original or an amended return, must be filed on or before the end of the 12th month following the close of the tax year for which the credit is being claimed.