Three Options for Part-Year Georgia
Taxpayers
Pick the Option That Results in the Lowest Georgia
Income Tax!
If you moved into or out of Georgia last year, you can
select among three possible options for calculating your Georgia personal
exemptions and deductions -- and you're allowed to select the combination
that gives you the LOWEST Georgia income tax!
INCOME RATIO
This is the default way of calculating the personal
exemption amount and deduction amount (either itemized or standard
deductions) for part-year Georgia income tax returns. If your gross
income last year was $50,000 and $20,000 was earned in Georgia, your
Georgia income ratio was 40%. You are allowed to subtract 40% of the
Georgia income tax personal exemption amount and 40% of either the Georgia
standard deduction or your total itemized deductions from your income to
calculate Georgia taxable income on your Georgia tax return. If you follow the instructions for
the Georgia Form 500 individual tax return, you will use the income ratio.
TIME RATIO
If you are filling out a part-year Georgia income tax
return, you may select the optional time ratio for determining the portion
of your personal exemptions and deductions to be subtracted to determine
your Georgia taxable income. This method is more beneficial for some
part-year Georgia taxpayers, particularly if they spent a substantial
portion of the year in Georgia, but a majority of their overall income was
earned in another state. To calculate the time ratio, divide the
number of days you lived in Georgia by 365 (total days in the year).
If you spent 200 days in Georgia, for example, your time ratio would be
55%. You would be able to subtract from your Georgia income 55% of
the Georgia income tax personal exemption amount and 55% of the Georgia
standard deduction or your total itemized deductions to determine the
income subject to Georgia income tax.
"GEORGIA ONLY" ITEMIZED DEDUCTIONS
For part-year Georgia taxpayers who itemized deductions on
their federal returns, there is a third option on the Georgia Form 500
income tax return. Instead of
subtracting a portion of total federal itemized deductions based on either
the income ratio or time ratio, those taxpayers may calculate and subtract
their actual Georgia itemized deductions -- deductions for those expenses
actually paid in Georgia. This option is particularly beneficial for
a taxpayer who moved into Georgia, perhaps from a low-tax or no-tax state,
then bought a home and incurred other substantial itemized deduction
expenses in Georgia. The part-year Georgia taxpayer must attach to
the Georgia income tax return a separate copy of a Schedule A, Itemized
Deductions, listing only the Georgia itemized deductions. That
separate Schedule A should be marked "Georgia Only" at the top.
If you will be paying part-year Georgia income tax, be
sure to ask your tax professional to pick the option that gives you the
lowest Georgia income tax due!
