2015 Corporation Income Tax General Instructions - Georgia Department Of Revenue (Page 8 of 24) in pdf

GENERAL INFORMATION: INCOME TAX

(continued)

CLAIMS FOR REFUNDS

DEFERRED COMPENSATION

A nonresident, who receives deferred compensation or income

For tax years beginning on or after January 1, 2003, a claim

from the exercise of stock options that were earned in Georgia

for refund of tax paid must be made within three years from the

in a prior year is required to pay tax on the income, but only

later date of either payment of the tax or the due date of the

if the prior year’s income exceeds the lesser of: 1) 5 percent

income tax return (including extensions which have been

granted).

of the income received by the person in all places during the

current taxable year; or 2) $5,000. However, the income is not

taxed if federal law prohibits the state from taxing it. Federal

PENALTIES AND INTEREST

law prohibits state taxation of some types of retirement income

The Georgia Code imposes certain penalties as follows:

including pensions as well as income received from nonqualified

deferred compensation plans if the income is paid out over the

• Delinquent filing of a return–5% of the tax not paid by the original

life expectancy of the person or at least 10 years. An employer

due date for each month or fractional part thereof up to 25%.

is required to withhold Georgia income tax on amounts that

.• Failure to pay tax shown on a return by the due date -1/2 of

are required to be included in the nonresident’s income. See

1% of the tax due for each month or fractional part thereof up to

Regulation 560-7-4-.05 for more information.

25%. Failure to pay tax penalty is not due if the return is being

amended due to an IRS audit.

ADJUSTMENTS TO FEDERAL INCOME

.• Negligent underpayment of tax-5% thereof.

Federal taxable income is used as the basis of computation to

calculate Georgia taxable income. Lines 2 and 4 of Schedule 1

• Fraudulent underpayment-50% thereof.

provide for the modifications required by Georgia Law. The total

• Underpayment of estimated tax- see page 13.

additions to Federal income should be indicated on Schedule 1,

Line 2 and listed on Schedule 4.

Note: The combined total of the penalty for delinquent filing of

A taxpayer must addback payments of more than $600 in a tax-

a return and failure to pay tax shown on a return cannot exceed

25% of the tax not paid by the original due date.

able year made to employees who are not authorized employees

and who are not excepted by O.C.G.A. section 48-7-21.1. An

Interest accrues at the rate of 12% per year from the original

authorized employee is someone legally allowed to work in the

due date until the date the liability is paid in full. An extension of

United States.

time for filing does not affect any interest or penalty charged for

late payment of tax.

Georgia does not allow the Federal deduction for income

attributable to domestic production activities (I.R.C.

COMPUTATION OF INCOME TAX

Section 199).

Georgia income tax is 6% of the Georgia taxable income shown

A corporation must add back all intangible expense and

on Schedule 1, Line 7. The amount of tax must be entered on

related interest expense directly or indirectly paid to a

Schedule 1, Line 8, and on Schedule 3, Line 1A.

related member. All such expense must be listed as an

addition to federal income even if the taxpayer qualifies for

RELATION TO FEDERAL RETURN

an exception. If the taxpayer qualifies for a full or partial

The Georgia return correlates to the Federal return in most

exception, Form IT-Addback must be completed in order

respects (see information on Page 1 about Federal tax

for the taxpayer to take a subtraction on Schedule 5 for all

changes). The taxable income shown on the Federal return is

or any portion of the addition listed on Schedule 4.

the basis used to calculate Georgia taxable income with

adjustments as provided by Georgia law. The accounting period

A corporation must add back all captive REIT expenses directly

and method for the Georgia return must be the same as the

or indirectly paid to a related member. All such expense must

be listed as an addition to federal income even if the taxpayer

Federal return. The Federal principles pertaining to execution of

qualifies for an exception. If the taxpayer qualifies for a full or

the return by an officer and the preparer also apply to Georgia

partial exception, Form IT-REIT must be completed.

returns. A copy of the Federal return and all supporting schedules

must be attached to the Georgia return.

Total subtractions from Federal income should be indicated

Affiliated corporations that file a consolidated Federal

on Schedule 1, Line 4 and listed in Schedule 5. The more

income tax return must file separate income tax returns with

commonly used items are listed in each of these schedules.

Additionally, adjustments due to other Federal tax changes

Georgia unless they have prior approval or have been

requested to file a consolidated return by the Commissioner

should be reported as stated in the instructions on Page 1.

of Revenue. If filing a consolidated Georgia income tax

U.S. obligation income must be reduced by direct and indirect

return, a separate net worth tax return must be filed by each

interest expense. To arrive at such reduction, the total interest

subsidiary. Visit our website at for

expense is multiplied by a fraction, the numerator of which is

instructions concerning proper return preparation and

the taxpayers average adjusted basis of the U.S. obligations,

mailing.

and the denominator of which is the average adjusted basis

of all assets of the taxpayer. Any other methodology requires

f a federal audit results in a change in taxable income, the

pre-approval from the Department. Also see Georgia Regulation

taxpayer shall file a return reflecting the changed or corrected

net income within 180 days of final determination. Mail the return

560-7-3-.10.

to: Georgia Taxpayer Services Division, P. O. Box 49432, Atlanta,

GA 30359-1432. Futher, if the changes result in a refund, the

e changes

refund must be claimed within one year of the date th

are submitted.

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2015 Corporation Income Tax General Instructions - Georgia Department Of Revenue Page 8

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