The responses to these Frequently Asked Questions provide potential donors with a better understanding of the rural hospital organization (RHO) expense tax credit program and Georgia HEART.
1. Which hospitals qualify to participate in the Georgia HEART Hospital Program?
Participation in the Georgia HEART program is limited to Georgia rural hospitals that meet qualification criteria established in the law, including county population size (50,000 or less, excluding military personnel); tax-exempt status or public hospital authority management; acceptance of Medicare and Medicaid; and minimum annual provision of indigent or uncompensated care. In order to qualify, rural hospitals have to file a five-year plan with the Georgia Department of Community Health (DCH). Presently, the DCH has qualified 54 RHOs, 54 of which are participating in Georgia HEART. Each year, a list of the HEART RHOs, listed by financial need as determined by DCH, is available here.
2. What are the limits on the tax credits available under the Georgia HEART program?
From 2018 through 2022, Georgia taxpayers could access $60 million of RHO tax credits each year, with each qualified RHO having access to $4 million of tax credits (until the total annual $60 million cap is met).
On May 9, 2022, Governor Brian P. Kemp signed House Bill 1041, which increased the cap on RHO tax credits to $75 million annually, beginning in 2023. From 2023 through 2024, Georgia taxpayers can access $75 million of RHO tax credits each year, with each qualified RHO having access to $4 million of tax credits (until the total annual $75 million cap is met). During the first six months of each year, a qualified RHO may only accept $2 million of corporate contributions and $2 million of individual contributions.
On April 19, 2024, Governor Brian P. Kemp signed House Bill 1339, which includes in Section 11 the following amendments to O.C.G.A. § 48-7-29.20 – Tax credits for contributions to rural hospital organizations – effective January 1, 2025:
- Program is extended for five additional years – from original sunset date of 12/31/24 to 12/31/29.
- Annual aggregate amount of tax credits allowed is increased from $75 million to $100 million.
- Individual owner of a pass-through entity (member of a limited liability company duly formed under state law, a shareholder of a Subchapter ‘S’ corporation, or a partner in a partnership) is able to contribute up to $25,000 (increased from $10,000) in the first six months of the year. (Contributions from this taxpayer type are unlimited in the second half of the year, as always.)
- Payment deadlines for applicants are revised, as follows:
- A taxpayer preapproved by the DOR on or before September 30 shall make the contribution within 180 days after DOR preapproval, but not later than October 31.
- This means that applicants preapproved by April 30 will have 180 days to make payment.
- Applicants preapproved between May 1st and September 30th will have until October 31st to make payment.
- A taxpayer preapproved by the DOR after September 30 shall make the contribution on or before December 31.
- Applicants preapproved after September 30th will have until December 31st to make payment.
- A taxpayer preapproved by the DOR on or before September 30 shall make the contribution within 180 days after DOR preapproval, but not later than October 31.
Effective in 2022, there is a new benefit for pass-through businesses, allowing a SALT (state & local income tax) limit workaround, coupled with a more generous HEART tax credit opportunity during the first six months of the year, per Georgia HB 149. Pass-through businesses may elect to pay state income tax at the entity level and may contribute to eligible rural hospitals through the HEART program at the same generous limits as C Corporations.
From January 1 through June 30 of each taxable year, the following limits apply with respect to Georgia HEART RHO contributions:
- Individual Filer – up to $5,000
- Married Filing Separately – up to $5,000
- Married Filing Jointly – up to $10,000
- C Corporation, Trust, or Pass-Through Entity electing to pay tax at entity level – up to 75% of Georgia Tax Liability
- Individual Owner of S-Corp, LLC, or Partnership (Pass-Through Entity) NOT paying tax at entity level – up to $10,000
After June 30 of each year, as long as tax credits are available, individual taxpayers may make unlimited contributions to RHOs for a corresponding 100% Georgia income tax credit.
3. What happens if the hospital the taxpayer wants to support has already reached their maximum $4 million annual contribution limit?
In the event that you desire to contribute to a RHO that has already received the maximum amount of contributions for that taxable year, you may choose another qualified RHO, or request Georgia HEART to designate one for you.
4. Can taxpayers who contribute to student scholarship organizations (SSOs) for a Georgia Education Expense Credit also contribute to qualified RHOs for a tax credit?
Yes, and Georgia HEART encourages those taxpayers who have been contributing to SSOs to continue to do so.
5. What if the amount of tax credit for which a taxpayer is eligible exceeds the taxpayer’s income tax liability?
The total amount of the RHO expense tax credit for a taxable year cannot exceed the taxpayer’s Georgia income tax liability. Any unused tax credit may be used against the taxpayer’s succeeding five years’ tax liability. This tax credit cannot be applied against prior years’ tax liability.
6. Are there any limits placed on how a RHO may use donor contributions?
Yes, RHOs must use contributions for health care-related purposes, which, in addition to the provision of health care services, includes the use of contributions for capital expenditures that facilitate the provision of health care-related services. Each year, RHOs must report to the DCH how they used the contributions and the DCH reports to lawmakers accordingly.
7. What is the process for contributing to a RHO for a tax credit?
Because the law limits total tax credits available to $75 million, taxpayers who wish to participate in the Georgia HEART hospital tax credit program must be pre-approved by the Georgia Department of Revenue (DOR). Credits are awarded on a first-come, first-served basis. Georgia HEART is accepting 2024 tax credit applications on its website.
Once the tax credit application is submitted, Georgia HEART takes care of the process on the taxpayer’s behalf, submitting the request to the DOR in the order in which it is received by HEART, notifying the taxpayer of their approval and payment deadline (180 days from approval date or 12/31/24, whichever comes first), and – once the payment is received – providing the taxpayer with the appropriate tax receipt for claiming the credit on his or her 2024 Georgia income tax return.
8. Is there a deadline to qualify for the tax credit?
In order to contribute to a RHO for a tax credit, an individual or corporation must satisfy all the required steps by the posted deadlines or prior to December 31st of the applicable tax year, whichever comes first.
9. How do I obtain pre-approval for the Georgia HEART RHO tax credit contributions?
Georgia HEART has streamlined the process for the taxpayer. Simply complete the online tax credit application and HEART will submit your request directly to the DOR for approval. HEART will communicate with you via email during each step of the process.
10. In determining the amount to contribute to a HEART RHO, how does a taxpayer determine their potential Georgia income tax liability?
If taxpayer income and deductions will not change much from the prior year, the taxpayer can look at their Georgia income tax return (Form 500) for their income tax liability for the prior tax year and estimate their tax liability accordingly. Of course, taxpayers should consult with their tax professionals to secure the best estimate of their upcoming Georgia income tax liability.
11. 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 a HEART RHO 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 a HEART RHO for the year and reduce each quarterly estimated tax payment accordingly.
Example: This year, you estimate that you will owe $10,000 of Georgia income taxes for the year. Of this amount, you contribute $1,200 to a HEART RHO in March for which you will receive a corresponding Georgia income tax credit. Normally, you would make an estimated income tax payment to the state of $2,500 on April 15, June 15, September 15, and January 15 (of the following year). Because you will be redirecting $1,200 of your Georgia income tax payments to a HEART RHO, you can reduce each of these estimated income tax payments by $300 ($1,200 divided by four), meaning that $2,200 will be the amount of each quarterly estimated income tax payment due to the state of Georgia.
12. Can I contribute through the HEART program for a tax credit if I don't reside in the state of Georgia?
HEART’s CPA firm has confirmed that there are complexities related to tax filers from other states taking the HEART tax credit – even when they are working in Georgia and paying Georgia income taxes. HEART recommends that any non-GA residents consult with their tax advisor as to whether the HEART tax credit would be the right choice for them.