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Georgia Film Tax Credits: An Easy Tax Saving Opportunity

Do you want to pay less on your Georgia income taxes? Have you been interested in being a part of the growing Georgia film industry?  Read more about the benefits of the Georgia Entertainment Industry Investment Act.

Are you ready to save 13% on your taxes? You can save on taxes and become a part of movies projects such as Hunger Games or TV productions like the AMC’s The Walking Dead.

Does this sound too good to be true? Yes – but it isn’t. Several years ago, Georgia created the Georgia Entertainment Industry Investment Act (“Act”). The Act was the beginning of the film and media industry’s growth in Georgia and it enabled Georgia taxpayers to save money on taxes.

How Does It Work?
From ABC to Sony, the television and movie industries have set up shop here in Georgia. You may have noticed a production being done right in your neighborhood. This surge in activity is because the Act provides for a credit for up to 30% of the production company’s expenses on production done here in Georgia. As most production companies can’t use all of the credits, they are allowed to sell their unused credits to any Georgia income taxpayer. Production companies sell these credits to individuals, trusts and/or corporations as part of the financing of their project.

What Are The Benefits? 
This is an easy way to reduce your Georgia tax liability. For example, you could purchase $20,000 of 2017 Georgia Entertainment Credits for $17,400 resulting in an immediate savings of $2,600.

A Georgia taxpayer may purchase Georgia Entertainment Credits, generally for around $.88 per credit, and apply them to their current year or future tax returns. Unused credits carryover for five years.

There are three main benefits for purchasing Georgia Entertainment Credits:

  1. Paying less on Georgia income tax.
  2. Getting a state tax deduction on Schedule A of your Form 1040 for the credits purchased. Part of this benefit is offset by including the spread as capital gain.
  3. Last year’s balance due can be paid the next year and avoid state underpayment penalties and interest. Missed estimated tax payments or withholding can be corrected without penalty.

What Are The Risks?
As with all investments, there are risks to consider. Most of the risks involved can be mitigated by considering the following:

  • Securing a guarantee from a Fortune 500 company (like NBC Universal or Sony);
  • Purchasing credits  from quality brokers and production companies; and
  • Purchasing credits which have been audited by the state.

How Can Frazier & Deeter Help?
Involve Frazier & Deeter early in the purchase. We have contacts throughout the industry to find the right credits for you. As CPAs, we are simply facilitators and advisors and not influenced by any sort of commission.

In 2013, we helped our clients purchase over $9.7 million of Georgia Entertainment Credits saving them over $1.2 million on their Georgia income tax liability.

What Are The Next Steps?
We can walk you through the entire process. Contact your personal Frazier & Deeter tax advisor (or Charli Traylor at 404.573.4132 or charli.traylor@frazierdeeter.com) today to discuss your tax planning options.

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