Georgia Qualified Education Expense Credit and Estimated Payment Credit

[felipeadp]

Georgia provides a tax credit for Qualified Educational Expenses ($2.5K married filing joint). I understand I cannot take a federal charitable contribution deduction when a state tax credit like this is allowed. However,

1. Can I enter the contribution to the Georgia Qualified Educational Expense as part of the Georgia Estimated Payments in the Federal Tax Payments worksheet? I understand there is a SALT limit of $10K but can I “use” the QEE $2.5K “instead” of the W-2 state tax withholding in case this is over $10K (I seemed to have overpaid on my state tax bill)? 
2. If this is not possible, it seems that is best to underestimate the state tax withholding throughout the year so at the end of the year, your state tax withholding plus your QEE payment adds up to $10K, especially if your final state tax bill is also around $10K. Do you agree or have a different view?

[BillM223]

I don't understand why you are bringing Georgia estimated tax payments into this.

As you said, any amount for which you are getting a credit on the state level cannot be deducted at the federal level. So when you did your federal and Georgia returns, did you see how much credit you received in Georgia then return to the charitable contribution section on the federal return and remove that amount? Of course, this may or may not update your Georgia numbers, so you need to take a look to see if your credit amount changed.

Even if this causes a change in the Georgia credit, you will find that you will have to go back and forth only 2 or 3 times before things settle down and stop changing.

What happens when you do this?

[felipeadp]

Thanks for your help.

I understand that If I do not reach the $10,000 maximum in SALT (state and local) tax deductions, I may
deduct my QEE contribution (up to that $10,000 SALT cap). In this situation, I was told that I would take a deduction for my QEE contribution as “additional state income taxes paid" which is part of the Schedule A and the Tax Payment worksheet.

When I add the QEE contribution, my Georgia State tax bill gets two credits, one for the QEE contribution itself, and one for the "additional state income tax paid" so the Georgia state refund is larger (as I overpaid the state even without the QEE contribution). If I don't add the QEE contribution as "additional state income taxes paid" then the Georgia State tax bill gets only one credit, the one for the QEE contribution.

So my question is if I can add this "additional state income taxes paid" item even if initial SALT is more thank $10K.  And if not, then for the future (this year) I should estimate my W2 withholding to get me to $7.5K so next year I can be under the SALT limit - or does it make any difference?

[BillM223]

You said "I understand that If I do not reach the $10,000 maximum in SALT (state and local) tax deductions, I may
deduct my QEE contribution (up to that $10,000 SALT cap)."

Where do you see it that the QEE contribution is considered a state income tax payment?

[felipeadp]

This was the guidance from the QEE organization - "Only if you did not reach the $10,000 maximum in SALT (state and local) tax deductions may you deduct your GOAL contribution (up to that $10,000 SALT cap). In this situation, please see these TurboTax instructions for taking a deduction for your GOAL contribution as “additional state income taxes paid.”

The TurboTax instructions describe how to add the contribution as a State Estimated Tax Payments for 2020 (the year of contribution).