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 be using 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 or options that give you the
lowest Georgia income tax due!
