A Georgia corporation had an enviable problem several years ago when it had to decide between two great jobs tax credits. It chose one, but then reconsidered and later wanted to choose the other, using the same jobs. The rules for the credits, however, do not allow double-dipping.
The company first claimed the Georgia Jobs Tax Credit but was unable to use it due to limited tax liabilities. So, the taxpayer carried that credit forward. Then, the corporation determined that it could use a different credit, the Georgia Quality Jobs Credit, a couple of years later, so it attempted to go back and amend its previous returns to claim the new credit based on the same jobs used to claim the original credit. The basic difference between the two credits is that the Georgia Jobs Tax Credit allows a write-off for creating jobs in certain business sectors in underdeveloped areas of the State, while the Quality Jobs Tax Credit requires that the jobs created pay higher-than-average wages.
The Georgia Department of Revenue, in Letter Ruling No. IT-2015-02, said don’t bother. Because the taxpayer had used the same set of jobs to first claim the regular Georgia Jobs Tax Credit, it could not go back and use those same jobs to newly qualify for the Georgia Quality Jobs Credit. A taxpayer can claim both credits at the same time if they meet all requirements for both credits. However, the credits cannot be based on the same set of jobs.
As the ruling notes, a taxpayer has to elect which credit will be used for the jobs when the taxpayer first claims it. That election cannot later be changed. No jobs that were included when the Georgia Jobs Tax Credit was claimed can be included in any calculations for the Quality Jobs Tax Credit, as the taxpayer learned.
Georgia Jobs Tax Credit
The Georgia Jobs Tax Credit provides between $1,250 and $4,000 in annual tax savings per job for up to five years. It is available to businesses in seven different sectors, including:
- Warehousing & distribution
- Research & development
The exact value of the job credits depends on two factors – how many jobs are created, and where. Businesses are allowed the credit if jobs are located in one of the 40 least developed counties of the state. A minimum number of jobs must be created per qualified business enterprise. This minimum value varies based on the economic level of the region. Unused credits can be carried forward for 10 years.
Georgia Quality Jobs Credit
The Quality Jobs Tax Credit is another tax credit allowed for jobs that pay higher-than-average wages. The credit ranges from $2,500 to $5,000 per job depending on the value of the job created. The credit is for employers creating at least 50 new high-wage jobs or relocating at least 50 high-wage jobs into the state in a 12-month period. The jobs have to pay at least 10 percent higher than the county average for wages. Unused credits may be carried forward for 10 years.