Frequently Asked Questions

Under the Georgia Tax Credit Scholarship Program, any company or individual that pays Georgia income tax is eligible to receive a dollar-for-dollar tax credit for approved donations to Arete Scholars. A C-corporation may redirect up to 75% of its entire Georgia income tax liability. Individual owners of S-corporations, LLCs, and partnerships may redirect up to $10,000 annually in exchange for a 100% tax credit.

By law, Arete may retain a small portion of each donation (usually 7-8%) to help defray program administrative expenses.

Georgia Tax Credit Scholarship Program

  • What is the history and purpose of the Georgia Tax Credit Scholarship Program that creates the opportunity for Arete Scholars to serve students and parents?

    In 2008, the Georgia General Assembly passed the Qualified Education Expense (QEE) Tax Credit Bill (HB1133), and Governor Sonny Perdue signed it into law. The legislation was further amended in 2011 (HB 325), 2013 (HB283), and 2018 (HB217). The law provides for the creation of student scholarship organizations (SSOs) to which Georgia individual and corporate taxpayers can contribute in exchange for a state income tax credit. SSOs like Arete use the contributions to award need-based scholarships to qualifying K-12 students, enabling them to attend private schools chosen by their parents.

  • How does the Qualified Education Expense Tax Credit work?

    Because there are limited tax credits available each year ($100 million for 2020 and 2021), a taxpayer interested in contributing to Arete must be pre-approved by the Georgia Department of Revenue (“DOR”). By approving a request, the DOR sets aside a certain amount of the available tax credits specifically for the respective taxpayer. The taxpayer first submits a 2020 and/or 2021 tax credit application to Arete Scholars. Each step in the process is outlined below:

    FOR 2020 TAX CREDIT

    1. Arete submits the taxpayer’s request for the 2020 tax credit to the DOR.

    2. Taxpayer receives a DOR Approval Letter within 15 days after Arete Scholars submits the application. The letter indicates the approval amount and 60-day deadline for making payment to Arete.

    3. Arete Scholars also receives notice of Taxpayer’s DOR approval and will email taxpayer detailed instructions regarding payment deadline and options.

    4. When notified of DOR approval (by DOR Approval Letter or email from Arete Scholars), taxpayer must submit payment to Arete Scholars before his or her 60-day payment deadline.

    5. Arete Scholars will send taxpayer Form IT-QEE-SSO1 (tax receipt) for claiming the credit on the 2020 Georgia income tax return.

    6. Taxpayer Claims Georgia Income Tax Credit: When 2020 taxes are filed in 2021, taxpayer will take a 100% Georgia income tax credit. 

    FOR 2021 TAX CREDIT

    1. Arete submits the taxpayer request for the 2021 tax credit to the DOR on the first business day of January 2021.

    2. Taxpayer receives a DOR Approval Letter within 15 days after Arete Scholars submits the application. The letter indicates the approval amount and 60-day deadline for making payment to Arete.

    3. Arete Scholars also receives notice of Taxpayer’s DOR approval and will email taxpayer detailed instructions regarding payment deadline and options.

    4. When notified of DOR approval (by DOR Approval Letter or email from Arete Scholars), taxpayer must submit payment to Arete Scholars before his or her 60-day payment deadline.

    5. Arete Scholars will send taxpayer Form IT-QEE-SSO1 (tax receipt) for claiming the credit on the 2021 Georgia income tax return.

    6. Taxpayer Claims Georgia Income Tax Credit: When 2021 taxes are filed in 2022, taxpayer will take a 100% Georgia income tax credit. 

    Taxpayers should always consult with an accountant for tax guidelines and implications. 

  • What is the maximum amount a taxpayer can contribute in exchange for the Georgia education expense tax credit?

    Each calendar year, until the annual program cap on available education expense credits is reached, taxpayers may receive a 100% state tax credit up to the following limits (provided these are less than the taxpayer's actual state income tax liability):

    C-corporations - 75% of GA income tax liability
    S-corporations, LLCs, Partnerships - $10,000
    Joint filers - $2,500 
    Individual filers - $1,000

  • Does a DOR approval require me to contribute (redirect) the full amount allowed?

    No. The approval amount caps the maximum donation amount allowed for a tax credit. Approved donors may contribute any amount up to the approved amount.

  • Can a corporation contribute to Arete Scholars under the tax credit program?

    Yes. Corporations can receive a tax credit for amounts contributed to Arete Scholars and many corporations have done so. For C-corporations, the tax credit is available up to 75% of annual Georgia income tax liability. Members of limited liability companies (LLCs), shareholders of S-corporations, and partners in partnerships are allowed a Georgia income tax credit for up to $10,000 of the amount they contribute to a SSO, so long as they would have paid Georgia income tax in that amount on their share of taxable income. 

  • How does a tax credit differ from a deduction?

    A tax credit is significantly more beneficial than a deduction. A 100% credit reduces your tax liability dollar-for-dollar while a deduction reduces the taxable income upon which taxes are calculated.

  • How do I know what my Georgia tax liability is?

    Your Georgia income tax liability is typically Georgia’s marginal tax rate (5.75% for 2021) multiplied by our Adjusted Gross Income (AGI). If your income and deductions will not change much from the prior year, you can look at Line 16 of your Georgia income tax return (Form 500) and estimate your tax liability accordingly. Please consult an accountant or other tax professional to provide you with a solid estimate of your upcoming Georgia income tax liability.

  • Can I reduce my Georgia income tax withholdings so that I can recoup my funds earlier than I would at tax filing time?

    Yes.  If you pay your Georgia income taxes by having an amount withheld each pay period from your paycheck, by reducing the amount of Georgia income tax that is withheld from your paycheck each pay period, you can recoup your contribution to Arete Scholars evenly over the remainder of the tax year. The portion by which you should reduce your withholdings is the amount of your contribution to Arete Scholars divided by the remaining pay periods in the year. This results in greater take-home pay throughout the year, as opposed to a potential refund at tax filing time.

    For example: If you are paid twice per month and contribute $1,200 to Arete Scholars in mid-March 2021, and you adjust your Georgia income tax withholdings in time to take effect for your March 31st paycheck, as of March 31st, there are 19 pay periods remaining for the year. You could reduce your withholdings by $63.16 per pay period, which is $1,200 divided by the 19 remaining pay periods for 2020.  The additional amount of “take home pay” will total $1,200 by the end of 2021.

  • Will this trigger an audit of my return?

    No. The credit is applied against your Georgia income tax liability and is pre-approved by the state of Georgia. It is treated just like additional withholding tax. Arete Scholars has developed a solid line of communication with DOR officials responsible for administration of the Georgia Education Expense Credit and works closely with them to ensure the fair and responsive administration of this program.

  • What is the deadline for making contributions that qualify for the tax credit?

    In order to contribute to Arete Scholars for a tax credit, an individual or corporation must receive pre-approval from the Georgia Department of Revenue. The pre-approval process must be completed and all contributions postmarked to Arete Scholars within 60 days of DOR pre-approval, and never later than December 31st of the applicable calendar year in order to be accepted.

  • What if I pay quarterly estimated taxes?

    If you pay your current year’s Georgia income taxes on a quarterly basis, in four equal installments, due on April 15, June 15, September 15, and January 15 (of the following year), you can reduce a portion of each quarterly estimated income tax payment if you contribute to Arete Scholars for a tax credit within the same year.

    To determine the amount by which you can reduce each quarterly estimated income tax payment, divide by four the total amount that you contributed to Arete Scholars for the year and reduce each quarterly estimated tax payment accordingly.

    As always, please consult your accountant or tax professional for detailed guidance.

  • May I paper file my taxes and claim this credit?

    No, as this credit (along with all Series 100 credits in Georgia) may only be claimed if you file your taxes electronically.

  • What forms of payment does Arete Scholars accept for donations?

    Arete accepts checks and credit card payments. Please note that when using a credit card, you will receive the opportunity to assist with the cost of the credit card transaction fee so that 100% of your donation will go to scholarship and you will be helping Arete defray the costs of accepting credit cards.

  • Is there an age or other restriction on who can participate in this program?

    There are no age restrictions on who can participate in this program. As long as you pay state taxes, you can redirect your Georgia income taxes to Arete Scholars.

  • How long does it usually take to receive approval from the Department of Revenue for my contribution?

    Under the law, the Department of Revenue has 30 days to approve your contribution. As a result of recent automation, the DOR currently provides approval within approximately two weeks.

  • Where is this credit explained in the Georgia Code?

    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 addition issues or questions, please refer to the Georgia Department of Revenue website.

  • Is Arete Scholars Fund a government agency?

    No. Arete Scholars Fund, Inc is a nonprofit corporation incorporated under the laws of the State of Georgia, is recognized by the Internal Revenue Service as a tax-exempt 501(c)(3) organization, and is recognized by the Georgia Department of Education as a qualified student scholarship organization under the Georgia law. Arete Scholars, not the state of Georgia, provides scholarships to students at its participating schools. Arete serves as an information clearinghouse; provides extensive contribution and scholarship processing to its scholarship families, donors, and participating schools; monitors legal and regulatory developments; shares best practices with like-minded schools and other scholarship organizations; solicits contributions from corporations; promotes the program in the CPA and financial community; and encourages donors and like-minded schools to direct financial aid to low- and middle-income families who otherwise would not have a choice to attend a Georgia private school.

  • Why would the state introduce a program like this?

    For several reasons. First, low-income students who begin attending private schools perform better academically, and graduate from high school at much higher rates than if they had stayed in their current schools. Second, the program results in significant savings to the taxpayer. For example, the cost-per-pupil in Atlanta Public Schools is about $15,300. By contrast, using tax credit donations, Arete pays a maximum of $4,000 per scholarship for students to attend a school that parents believe better meets learning needs. Everybody wins when you can obtain better academic results at a significantly lower cost.

  • Given private school tuition rates, is a $4,000 scholarship enough for low-income families?

    The average tuition for a private school in Georgia is around $10,500 per year. Most of these schools are deeply committed to both character development and academic achievement. Arete currently partners with a diverse range of over 100 excellent schools. A combination of parental contribution and school financial aid makes up the difference.

  • Who are your corporate partners?

    Our generous partners include dozens of companies of all sizes. Some of our larger supporters include Waste Management, Walgreens, Staples, Dollar General, Chick-fil-A, Universal Health Services, and Gap, Inc.

  • Does the tuition tax credit scholarship program take money from public schools?

    No. The program does not touch the education budget. Currently, 18 states have implemented tax credit scholarship programs as a way to responsibly provide educational opportunities to low-to-middle-income families. Additionally, tuition tax credit scholarships guarantee savings to taxpayers by awarding amounts that are substantially less than the per student expense in public schools. These savings can remain invested in public schools.

  • Are there any downsides for me or my company getting involved?

    It is hard to see any. It is a budget-neutral transaction that can radically alter the lives of under-resourced children. Through this relatively simple step, corporations make a lasting, tangible difference in the lives of low-income families, help break generational cycles of poverty, and give thousands of children a brighter future.