Hello there, Andrea Altman with Killingsworth Spencer here. Today I want to let you all know about how the Georgia Film Tax Credits work, and how they can save many GA residents on their state income taxes.
Many people are unaware of just how big a deal the GA film industry is and how it benefits every citizen. GA currently ranks 3rd behind California and New York in the total number of film and television projects produced. Over 92,000 Georgians are employed by the film industry with over $4.6B in direct wages, and an estimated economic impact of $9.5B (these are the latest figures from the state of GA as of June 2018).
The state of Georgia allows for a film or TV production to claim up to a 30% tax credit for producing the project in our state with no limit as to the production budget. The movie studios and production companies often times cannot use all the credits allotted them in a given year, so the state allows them to “sell” these unused credits to the general public. The safest avenue to purchase these unused credits is through licensed brokers.
Here is a quick example as to how the process works:
Let’s say you owe $20,000 in state income taxes for 2019. You can go through a licensed broker (Killingsworth Spencer has a few we go to for the benefit of our clients) and purchase $20,000 worth of film credits for between 89 cents to 91 cents on the dollar. (We will use 90 cents as our example here) You pay $18,000 for $20,000 in Film Credits to be used for a $2,000 savings. A few added benefits of purchasing the credits include avoiding underpayment of penalties if you are underpaid on your GA tax liability for the year, and you can purchase the credits up until the time you file your tax return, including extensions. You may carry forward any unused credits in your account to the next tax year.
This tax strategy has certain other important caveats that must be met in order for you to obtain all the benefits. If you have an interest in learning more or you have questions, please feel free to give us a call.