Taxpayers often wish they had greater control over how their tax dollars are allocated. The Arizona State Tax Credit program gives you the opportunity to direct how your money is spent by choosing which of the approved organizations you contribute to. (If you live outside Arizona, check with your state to see what programs they offer.)
When you donate to qualified charitable organizations, you receive a dollar-for-dollar credit against Arizona state taxes owed. Using tax credits doesn’t save you money. It will most likely leave you in a tax neutral situation—meaning you will pay about the same amount whether you just pay the tax or use the tax credits. You can contribute up to the amount of your expected Arizona tax liability. If you contribute more than your state tax amount, the credits can be carried forward up to five years. You also have until April 15, 2018 to make tax credit donations for 2017. Here are the available tax credits:
1. Public School Credit – Contribution amounts eligible for credit: $200 for single filers/ $400 for joint. If you know what school you would like to donate to, go to their website and they will likely provide you with information and a form to use to make a donation. You can also visit the State of Arizona Department of Revenue website for more information.
2. Private School Credit – Contribution amounts eligible for credit: $1,089 limit for single filers ($546 form 323, $543 form 348)/ $2,177 limit for married filers ($1,092 form 323, $1,085 form 348). You can find additional information about this program from the Arizona Department of Revenue website. They also have a list of qualified tuition organizations that can receive this credit.
3. Arizona Credit for Donations Made to Qualifying Charitable Organizations (formerly known as the “Working Poor Credit”) – Contribution amounts eligible for credit: $400 for single filers/ $800 for joint. Again, the Arizona Department of Revenue provides a list of qualifying charitable organizations and links to their websites. One of our clients is executive director at Family Promise, a shelter that helps homeless families get back on their feet. We heartily recommend this great organization as one that will do much good with your donation.
4. Foster Care Charitable Organization – Contribution amounts eligible for credit: $500 for single filers/ $1,000 for joint filers. The Arizona Department of Revenue provides a list of qualifying foster care organizations.
5. The Arizona Military Family Relief Fund Credit – Contribution amounts eligible for credit: $200 for single filers/ $400 for joint. THIS FUND IS CLOSED FOR 2017. Plan now to contribute early to this fund in 2018. The fund can only accept a total of $1 million in donations, so once that limit is reached, all donations received are returned. This year the fund reached capacity in October.
Be sure to print the confirmation page for each tax credit and submit them to your tax professional.