Georgia Private School Tax Credit/ GRACE Scholars, Inc. Frequently Asked Questions

Frequently Asked Questions:

If you have any additional issues or questions, please refer to:

The Georgia Department of Revenue website
https://etax.dor.ga.gov/inctax/taxcredits.aspx,

The Georgia Department of Education:
http://public.doe.k12.ga.us/pea_policy.aspx?PageReq=PEAHB1133,

Grace Scholars, Inc:
404-888-7828 or send email at gracescholars@archatl.com

Who can contribute?

Any Georgia taxpayer may make a donation and qualify for the Georgia Private School Tax Credit, assuming the State cap of $50 MM hasn’t been met.

Why is a donation to GRACE unique?

A donor receives 100% credit against State taxes. Donor is reimbursed 100% of donation. Money that would have gone to the State is now supporting Catholic schools in Georgia.

What does GRACE do with the donation?

GRACE provides tuition assistance to families with financial need. Donors can designate specific schools to receive their donation.

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How does it work?

A taxpayer in Georgia can “use” part of his Georgia income tax for a student scholarship organization (SSO) like GRACE Scholars which is to provide Scholarships for students entering Catholic schools in Georgia.  This occurs because the tax payer receives a 100% tax credit against his GA tax liability for the amount donated to GRACE Scholars. Therefore, money that was going to pay taxes is being “used” to support Catholic education for those in need.

How much can I contribute?

  • A single taxpayer can “use” up to $1,000.
  • A married couple filing jointly can “use” up to $2,500.
  • A married couple filing jointly, that pays AMT (alternative minimum tax) can “use” up to $ 2,500 and save $725 (due to a tax savings of $3,225 for both federal and state).
  • A “C’ Corporation can “use” up to 75% of its total Georgia state tax liability.
  • Partnerships, LLCs and Sub-S corporations are subject to the owners’ individual limits.

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Do I have to contribute the maximum allowable limit based on my tax filing status?

No. You may contribute any amount up to the maximum limit based on your filing status in order to receive a tax credit.

How often can I contribute?

You can contribute as often as you like during the calendar year.

How can I contribute?

You can contribute in one of two ways:

You can contribute in one-step by letting GRACE Scholars, Inc. deal directly with the Georgia Department of Revenue (DOR) for you, OR
You can contribute in two-steps by getting pre-approved by the Georgia DOR before sending your contribution to Grace Scholars, Inc.

For specific instructions for one-step or two-steps contribution process, along with required forms for each, please click on the “Contribute for a Tax Credit” link on the right.

Why are there two options for contributing?

When the Georgia Private School Tax Credit program was introduced, a process for contributing was established. This first or original process is the two-step contribution process. GRACE Scholars, Inc. introduced a new process for 2010 for those who are interested in faster and more efficient way of contributing. This new process is called the one-step process.

Both processes are still available because some people have gotten used to the original two-step process and would prefer to continue contributing using this process.

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What's the difference between the one-step and two-steps contribution process?

The one-step contribution process is the most recent process introduced in 2010. Contributors will get their tax contributions processed faster and with lesser number of required information to complete. It is one-step because the contributor sends the necessary information in one step to GRACE Scholars, Inc. GRACE Scholars, Inc. deals with the Georgia Department of Revenue (DOR) on behalf of the contributor.

The two-steps process is the first process introduced at inception of GRACE Scholars, Inc. It is called two-steps because the contributor deals with the Georgia DOR first, and then GRACE Scholars, Inc. The contributor’s contribution takes longer to process.

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Why choose the one-step vs. the two-steps contribution process?

You choose the two-step process if you are used to this process and do not want to learn a new (although, simpler) process. You also choose the two-step process if you prefer to wait until you receive pre-approval from the GA DOR for your tax credit before writing your contribution check.

The one-step process is the recommended process for the reasons outlined in Question 6 above. Because GRACE Scholars will handle all processing, contributors writes their contribution checks sooner instead of waiting until pre-approval from the GA DOR is received (as in the case of the two-step process). GRACE Scholars, Inc. will not cash the check until it receives approval from the GA DOR.

How does a tax credit differ from a deduction?

A tax credit is significantly more beneficial than a deduction. A credit reduces your Georgia taxes dollar-for-dollar while a deduction reduces the taxable income upon which taxes are calculated. If you claim the tax credit on your Georgia return, you cannot also claim a deduction for the same donation on your Georgia return. However, you may be able to claim the payment as an itemized deduction on your Federal income tax return, thus lowering the amount of Federal tax paid.

What is the deadline to donate to GRACE for a tax credit?

Donations to GRACE may be made at anytime.  However, if you would like to apply your tax credit to the current year, you must make your contribution by December of the current year.  Please note: all donations to GRACE Scholars must be preapproved by the state.  Therefore, GRACE recommends that you complete and send your, pre approval form (IT-QEE-TP1) to the State by mid-October to begin the donation process. For forms and instructions please click “Contribute for a Tax Credit” link on the right.

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Why must I get preapproval from the State?

Georgia has allocated $50 million of credits for the entire program.  The preapproval form ensures that there are credits available to reimburse the total amount of your donation.

Can I specify that my donation be used for scholarships at a specific Catholic school?

Yes. All of the Catholic schools in Georgia are eligible to receive funding through GRACE Scholars, Inc.

What schools are in archdiocese of Atlanta are part of GRACE?

Not all catholic schools are affiliated with GRACE Scholars, Inc. The following schools are affiliated with and support the efforts of GRACE Scholars, Inc. We ask you to support the following schools by selecting them as recipients of your tax dollars:

Blessed Trinity Catholic High School; Christ the King Catholic School; Holy Redeemer Regional Catholic School; Immaculate Heart of Mary Catholic School; Our Lady of Mercy Catholic School; Our Lady of Assumption School; Our Lady of Victory Regional School; Queen of Angels Regional Catholic School; St. Catherine of Siena Catholic School; St. John Neumann Regional School; St. John the Evangelist Catholic School (Hapeville); St. Joseph Catholic School (Athens); St. Joseph Catholic School (Marietta); St. Jude the Apostle Catholic School; St. Mary Catholic School; St. Peter Claver Regional Catholic School (Decatur); St. Pius X Catholic High School; St. Thomas More Catholic School.

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What schools are in the diocese of Savannah are part of GRACE?

Not all catholic schools are affiliated with GRACE Scholars, Inc. The following schools are affiliated with and support the efforts of GRACE Scholars, Inc. We ask you to support the following schools by selecting them as recipients of your tax dollars:

Aquinas Catholic High School; Blessed Sacrament Catholic School; Immaculate Conception Catholic School; Mount de Sales Academy; Notre Dame Academy; Our Lady of Lourdes Catholic School; St. Anne Pacelli Catholic School; Sacred Heart Catholic School; St. Anne Catholic School; St. Frances Cabrini Catholic School; St. Francis Xavier Catholic School; St. James Catholic School; St. John the Evangelist Catholic School (Valdosta); St. Joseph Catholic School (Macon); St. Mary on the Hill Catholic School; St. Michael Catholic School; St. Peter Claver Catholic School (Macon); St. Peter the Apostle Catholic School; St. Teresa Catholic School; St. Vincent’s Academy.

Can I specify that a particular student receives a GRACE scholarship?

No.  Donors may specify at which qualified school they desire the contribution to be distributed, or the most Economically Disadvantaged Students only, but not for specific children or families.

What is a Student Scholarship Organization?

A Student Scholarship Organization or SSO is a charitable organization that provides educational scholarships or tuition grants to eligible students without limiting availability to only students of one school. It is exempt from federal income taxation under Section 501(c)(3) of the Internal Revenue Code and allocates 90 percent of its annual revenue for scholarships or tuition grants to allow students to attend any qualified school of their parent’s choice. GRACE Scholars is an SSO founded by Archbishop Gregory of the archdiocese of Atlanta and Bishop Boland of the diocese of Savannah.

What is GRACE Scholars, Inc.'s taxpayer ID?

GRACE Scholars Inc. taxpayer ID is 26-3237980.

What is a qualified school or program?

Qualified school or program means a nonpublic primary school or secondary school that:

  1. Is accredited or in the process of becoming accredited by one or more entities listed in subparagraph of paragraph (6) of Code Section 20-3-519; and
  2. Is located in the State of Georgia, adheres to the provisions of the federal Civil Rights Act of 1964, and satisfies the requirements prescribed by law for private schools in the State of Georgia.

I usually get a refund from Georgia. What happens if I donate to GRACE?

Your refund will increase by the amount of your donation.

How is a GRACE donation treated on my Federal return?

The donation qualifies as a charitable contribution and can reduce your Federal taxes.

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Can I still file my returns electronically?

Yes, for both Federal and State Returns. See the tax filing guidance section on our website.

When will I receive the state tax credit for my contribution to GRACE Scholars?

For contributions made during the current calendar year, the tax credit will reduce the current year’s tax liability.

How do I determine what my tax liability is?

By reviewing your prior year tax return, you can determine what your total liability was last year and assuming amounts are similar what your liability would be this year. Remember, this is the total of your tax liability and not necessarily the amount deducted from your paychecks, the amount refunded to you, or the amount due. 

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What if I make a tax credit eligible contribution but do not owe that much in Georgia taxes?

If your Georgia income tax liability is less than the tax credit available to you, you may carry the excess forward for five years. If the amount of your tax credit, income tax withholdings, and estimated income tax payments exceed your Georgia income tax liability, the state of Georgia will refund the excess to you.

Will this trigger an audit of my return?

No. The credit is applied against your Georgia income tax liability, and is preapproved by the state of Georgia. It is treated just like additional withholding tax.

Where is this credit explained in the Georgia Law?

The tax credit guidelines are listed in the Georgia Code Title 48 Chapter 7-29.16.  The details of the qualified Student Scholarship Organization are listed in the Georgia Code Title 20 Chapter 2A.  If you have any additional issues or questions, please refer the Georgia Department of Revenue website, https://etax.dor.ga.gov/inctax/taxcredits.aspx

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Who qualifies for the GRACE Awards?

Any resident entering a Catholic school for the first time from a Georgia public school, or a child eligible to enter kindergarten (or pre-kindergarten if an accredited program) with financial need may qualify for a GRACE scholarship.

How do I apply?

Please contact your local Catholic school for information on applying for a GRACE Scholarship.

What is the deadline to apply for a GRACE Scholarship?

GRACE Scholars must receive a completed Family Registration Form from participating schools during March and April.  Therefore, interested families should request financial aid information and undergo the financial review process in February.  Please note: applications for a GRACE Scholarship are turned in directly to the school that you desire your child to attend.

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Can the same student receive scholarship money for more than one year?

Yes.  Once a GRACE scholarship is awarded, the student will continue qualifying for the aid as long as the family maintains financial need and the student remains in good academic standing with the school.

Is there a maximum that a student can receive?

Yes.  The maximum scholarship is no greater than the identified financial need.

How much is a typical scholarship?

Award amounts are dependent on both the amount of funds available and the family’s need. 

When is the scholarship money distributed?

Money donated prior to May 31 will be awarded to students in August of that year.  Money donated after June 1 will be awarded to students in August of the following year.

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