Georgia income tax
In Georgia, the Department of normal Revenue is the agency responsible for collecting income taxes. The Georgia income tax is a progressive tax for which the federal gross income is kept as the basis of determination. All resident individuals, businesses and trusts who file a federal income tax return are to pay Georgia income tax. Their nonresident counterparts, whose earnings from Georgia sources are more than 5% of the income from all sources combined, are subjected to Georgia income tax. In addition to this, all residents and nonresidents who have income taxable in Georgia and not federally are also required to pay Georgia state income tax. For retired persons, exclusions of up to $30,000 of their income may be allowed for the tax year starting on Jan 1 2007, if they are above the age of 62, or are disabled permanently. This amount will be $35,000 for tax years beginning on 01,01, 2008.
Tax rates:
For the head of family or for those filing jointly, the tax will be estimated as an amount from 1% to 5%of the first $10,000 of the taxable income, along with 6% of the income over $10,000.
For those who file single returns, the tax will be 1-5 percent of the first $7,000 of the taxable income in addition to 65 of the taxable income which exceeds $7,000.
For married couples who file separately, the tax will be 1-5 percent of the first $5,000 of the income that is taxable, along with 6% of the income exceeding $5,000.
Date of filing and paying taxes: If you pay your taxes based on the calendar year, the due date is April 15, and if it happens to be a Sunday or a holiday, the next working day. For those who pay their taxes on the basis of the fiscal year, the return should be filed on or before the 15th day of the fourth month after the closure of his/her fiscal year. Though the filing date can be extended as per the provisions but the payment date of taxes cannot be extended.
Extension of filing date: The automatic extension allowed federally is acceptable in Georgia. The pending tax must be prepaid and produced with Form 560. It should be noted that the extension allowed for filing the return doesnt free the taxpayer of penalties and interest for delayed filing and payments.
Tax exemptions and deductions: Exemption allowed for each taxpayer and spouse is $2,700 and that for the dependants is $3,000 each. An amount of $2,300 is allowed as standard deduction for individuals filing single and the heads of families,$3,000 for those filing jointly, and $1,500 for couples who file separately. For blind taxpayers and taxpayers above the age of 65, an amount of $1,300 is allowed as an additional exemption.
Estimated tax: All individuals who expect normal their gross amount of income to exceed the sum of the exemptions, credits, deductions expected and an amount of $1,000 that is not subject to withholding are required to pay estimated tax on a quarterly basis.
Income tax for businesses: In Georgia, income tax for businesses are determined on the basis of the net federal income after making specific modifications as per the new legislation. All businesses that function in Georgia or earn from Georgia sources are to pay Georgia income taxes.
- Tax rate: The tax is calculated as 6% of a business taxable income that is made from the dealings in Georgia.
- Dates for filing and tax payment: Those who pay their tax based on the calendar year, the date of filing and payment of tax should be done on or before the 15th of March. For businesses which follow the fiscal year for the filing, they should do so by the 15th day of the third month of the closure of the particular business fiscal year. An automatic federal extension is also accepted by Georgia and the tax that is pending must be prepaid. The extension is granted for the filing process alone and it doesnt exempt the business from penalties and interests resulting due to the delayed payment.
Credits: The credits allowed by the law in Georgia are:
- Basic Skills Education Tax Credit
- Business Enterprise Vehicle Credit
- Business Occupation or Business License Tax Credit
- Child Care Property Tax Credit
- Cigarette Export Tax Credit
- Diesel Emission Reduction Credit
- Electric Vehicle Charger Credit
Refunds: The speed with which the refunds will be processed depends on the prompt and correctly filing of your returns. Taxpayers may confirm the status of their refunds through internet or by telephone enquiries. It is estimated that nearly 70% of the taxpayers receive refunds every year in Georgia.
Credits: Residents are allowed refundable credits against the amount of tax pending for the income tax they pay to other states in the U.S. other than this, residents whose federal income is $19,999 or less may be eligible for a refundable low income credit.
Filing of returns: As Georgia is amongst the members of the electronic filing program, the returns may be filed electronically through an authorized tax preparer or via internet using approved software packages. The processing of refunds is normally done within 21 days for the electronically filed returns.
Withholding of tax: A system similar to that followed by federal tax department is followed in Georgia for the payment schedules of withholding taxes. Employers must withhold the income taxes from the salaries of their employees, and should note the same in the respective payroll records. If his/her tax is not withheld, the taxpayer should update the revenue department of the matter.
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