Georgia taxpayers get a tax credit for helping young adults leaving foster care

Eshontee Rowe is a child advocate who spent 6.5 years in the foster care system. (Credit: Meredith Fletcher)

The Gist

Georgia lawmakers in 2022 laid the groundwork to help young adults leaving the foster care system get a good start in life while giving taxpayers another tax relief option.

At that time, the Georgia General Assembly passed House Bill 424, also known as the Fostering Success Act. This law created the Qualified Foster Child Donation Credit program. It’s a tax credit plan that allows taxpayers to redirect their state income tax dollars to qualified organizations providing support services to young adults transitioning out of foster care.

Capped at $20 million a year, the money is used to help young adults ages 18 to 25 once they leave foster care.

What’s Happening 

The tax credit took effect in 2023. The number of qualified organizations participating in the program has nearly doubled to 39 this year from 20 last year.

A bill to increase the cap on the tax credit to $30 million a year failed during this year’s legislative session because the House and Senate couldn’t agree on whether to expand the annual cap. It remains at $20 million a year.

As of March 28, $153,000 of the $20 million fund has been approved for the 2024 tax year. Roughly $19.8 million remains.

“With this being the second year of the tax credit, this tax credit opportunity is still relatively new and unknown,” Heidi Carr, executive director of Fostering Success Act Inc., told State Affairs. “It takes a while to get the awareness around it up.” 

Carr’s group is one of the qualified organizations participating in the tax credit program. The nonprofit is not connected to the government program.

Georgia taxpayers get a dollar credit for every dollar they donate to a qualified organization, up to a certain amount. Here’s how it works:

  • An individual or business applies through the Georgia Department of Revenue to qualify for the tax credit. The taxpayer specifies how much to donate and which organization will get the donation. 
  • Once approved, the taxpayer makes a payment directly to the organization. 
  • When the organization receives the payment, it sends the taxpayer the documents required when filing their state tax return so they can get their tax credit. The organization also notifies the state of the transaction.

Why It Matters 

Each year, more than 700 young adults leave the foster care system in Georgia. They are some of the most underserved and overlooked people in the foster care system. Many never return to their biological families or get adopted. Once they leave the system, they often have little to no guidance as they enter college or the workforce.

The fostering success funds will help those young people with education, housing, counseling, medical care and transportation services.

Pam Parish

Money generated from the tax credit has enabled Connections Homes to help 20 young people so far this year, Founder and Chief Executive Officer Pam Parish told State Affairs.

The Alpharetta-based nonprofit’s main goal is matching young people who have left or are leaving foster care with mentoring families. However, the $20,000 received through the tax credit program allows the organization to do much more, Parish said.

In one instance, they helped a young mother of two in her early 20s who is attending college and dealing with cancer. The organization paid the former foster care youth’s rent and car note and was able to “do the things that we could worry about and let her worry about getting better and staying in school,” Parish said.

Without the money generated through the Fostering Success Act’s tax credit program, such help would have been a “funding struggle,” Parish added. 

“Our main program is our mentorship, which is immensely helpful to our kids,” she said. “But really to get into these practical needs and [having] funding available to do that is really helpful for our organization but most importantly for these kids.”

The organization has helped some 350 foster youth in its 10-year existence, Parish said. She and her husband have eight daughters, seven of them adopted. Five became part of the family after the age of 18 due to various circumstances, including surviving trafficking, homelessness and aging out of foster care, she said.

Similarly, Wellroot Family Services has been able to help foster youth pursuing college degrees.

“The Fostering Success Tax Credit bolsters the housing and wraparound services we provide for those youth pursuing postsecondary education and has enabled us to provide scholarships to former foster youth,” Wellroot CEO Allison Ashe said. “Because of the tax credit and the generosity of donors, we were able to provide additional funds to some of the youth pursuing college degrees to use for books and other academic supplies.” 

What’s Next?

It’s not too late to participate in the 2024 tax credit program. To qualify, taxpayers must get the state’s approval and make their payments within 60 days of being approved or by Dec. 31, whichever comes first.

Between January 1 and June 30, the following yearly contribution limits are based on the taxpayer’s filing status: 

  • Single individual or head of household: Up to $2,500
  • Married filing jointly: Up to $5,000
  • Individual owner of an S corporation, member of an LLC or partner in a partnership: Up to $5,000
  • C corporation, trust, or pass-through entity electing to pay tax at entity level: Up to 10% of Georgia income tax liability

Learn more about the Fostering Success Tax Credit here. As with any tax matter, consult your tax adviser. You can find a list of certified foster child support organizations on the Department of Revenue website.

Read these related stories: 

https://stateaffairs.com/georgia/taxes/georgia-tax-breaks/
https://stateaffairs.com/georgia/social-services/hope-scholarship-foster-youth/
https://stateaffairs.com/georgia/social-services/aging-foster-care-georgia/
https://stateaffairs.com/georgia/social-services/georgia-foster-care-system-federal-aid/

Have questions? Contact Tammy Joyner on X @lvjoyner or at [email protected].

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