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Arizona Tax Credits - Tax Year 2013

Charitable and Educational Tax Credits Permitted

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Arizona Tax Credits - Tax Year 2013
© Judy Hedding

Last updated: December 5, 2013

There are many people in Arizona who could do a lot of good for a lot of people, and it wouldn't cost them even a dollar. The State of Arizona offers tax credits in certain situations allowing some Arizonans to make contributions to schools and non-profit organizations, and then receive that money as a direct credit (not just a deduction) at the time income taxes are filed. These tax credits are for individuals, not businesses. Here are the basics.

1 - Charitable Contributions Tax Credit


New for the 2013 tax year: you do not have to itemize deductions to claim a credit for charitable contributions.

Still, you can't just pick any non-profit organization. To qualify for this tax credit, a charity to which you would contribute must provide assistance to residents of Arizona who either receive Temporary Assistance of Needy Families benefits, are low income residents of Arizona, or are chronically ill or physically disabled children. Some organizations that serve foster children might also qualify. You don't have to find that out for yourself; each charity knows if they qualify for the tax credit. Most of them will indicate this on their website if they are. The organization may also have a form for this contribution or an online payment system. You can often find the annual report online to take a look at how the money at that organization is spent. Even if the charity's website doesn't have the information, you can call them to get it. The important issue here is that for you to receive the tax credit, the organization must be able to provide a copy of the certification letter from the Arizona Department of Revenue. Once you know that the organization you support is certified, then you can make the contribution and take your Arizona tax credit when you file your tax return. You'll need Form 321.

If you don't have time to check out all the individual organizations that might qualify, and you don't have a favorite qualifying charity in mind, there are umbrella organizations, like United Way, where you can donate the money and they will distribute it.

Read the complete and official information about the Arizona Department of Revenue Charitable Tax Credit.

Tip: You don't have to donate to the charity all in one lump sum. If you donated to the same organization several times throughout the year, you can total those qualified donations up, up to the maximum $200/yr (single) or $400/yr (married filing jointly) to qualify for the Arizona tax credit. In order to take the tax credit, your donations must be received by the agency by December 31, 2013.

2 - Qualified Foster Care Charitable Contributions


New for the 2013 tax year: Arizona taxpayers may receive a credit on their Arizona income tax for donations made to a Qualifying Foster Care Charitable Organization. The organization must provide ongoing services to at least 200 foster children in Arizona and spend at least 50% of its budget on ongoing services to foster children in Arizona. You don't have to determine which ones qualify, because you can find a list of those approved organizations on the AZ Department of Revenue’s website. You do not have to itemize deductions to claim a credit for this charitable contribution.

Taxpayers filing as “single” and “head of household” and “married filing separate” may claim a maximum credit of $400. Taxpayers that file as “married filing joint” may claim a maximum credit of $800.

Read the complete and official information about the Arizona Department of Revenue Charitable Tax Credit.

Tip: In order to take this tax credit, your donation must be received by the qualified organizations by December 31, 2013.

Warning: If you are going to make contributions to both charitable organizations and foster care organizations, you can't just donate the maximum for both and receive the full tax credit for both. Check with your tax adviser or accountant if you'll be donating under both programs.

3 - School Tax Credit


If you don't itemize deductions on your income tax, you can still do good for others by contributing to education in Arizona through the School Tax Credit.

You don't have to have a child in school, but you must have a tax liability for at least the amount of your donation. In other words, if you only owe $100, you can't get a $200 tax credit. The school also has to be qualified by the Arizona Department of Revenue. All Arizona public schools qualify, and there are some special schools that do, too. If you don't owe Arizona taxes this year, but you feel you will in the next few years, you may carry forward your school tax credit for up to five consecutive taxable years.

These monies are not used to fund regular school activities. The donations you make can only be used for extra curricular activities, like sports programs, field trips, after school tutoring programs, after school arts programs, etc. or designated "character education programs." You are allowed to specify which programs you'd like your donation to support.

Read the complete and official information about the Arizona Department of Revenue School Tax Credit. You'll find the links to the lists of eligible schools, including charter schools, here.

Tip: For public school donations an Arizona tax credit is available up to the maximum $200/yr (single) or $400/yr (married filing jointly). In order to take the tax credit, your donations must be received by the school by December 31, 2013.

How I Make My Decision on the Arizona Public School Tax Credit
 

This year I'll be contributing to a public school and receiving the tax credit. There's a somewhat unusual consequence associated with the school tax credit: it is likely that in those districts where families have higher incomes, schools might receive more donations than the ones where the families have lower incomes. That's because even though it's a tax credit, you must advance the money before you receive it back in the form of a tax credit.

There's nothing wrong with contributing to your own child's school, but I decided to do it a little differently. I did some research about schools where the kids might be in more need of after-school programs and opportunities. I found an elementary school where the kids were trying hard, but not quite achieving the educational requirements of the state, where the drop out rate was not bad, where basically all of the kids qualified under the subsidized lunch program in a low income area. How you contribute, of course, is a personal decision.

Warning: In order to qualify for this tax credit your donation must be made in the same year as the tax year, in other words, by December 31st. Schools and school districts are often closed between Christmas and New Year's. You should verify how mail received during that time will be treated to ensure that they will issue a receipt to you dated no later than December 31, 2013. Several school districts now offer online contributions.

Your criteria for selecting a school is a matter of personal choice. Here are some resources for researching schools.

How To Tell How a School is Doing
Arizona School Report Cards

How To Tell How Many Kids in a School Qualified for Reduced Price or Free Lunches
School Lunch Report

4 - Private School Tuition Tax Credit
 

Contributions to qualified private schools under this program are used to fund scholarships for tuition or grants. There are two private school donation tax credits available: Credit for Contributions to Private School Tuition Organizations, and Credit for Contributions to Certified School Tuition Organizations.

The maximum tax credit for tax year 2013 for for single taxpayers under the  Credit for Contributions to Private School Tuition Organizations is $517 and for married taxpayers filing jointly is $1,034. The maximum tax credit for tax year 2013 for for single taxpayers under the Credit for Contributions to Certified School Tuition Organizations is $514 and for married taxpayers filing jointly is $1,028. The Credit for Contributions to Certified School Tuition Organizations is only available to individuals that first donated the maximum amount allowed under the Credit for Contributions to Private School Tuition Organizations.

Unlike the Public School Tax Credit, you can make this type of contribution from January 1, 2013 through April 15, 2014 and claim it as a tax credit for either the tax year 2013 or 2014.

Read the complete and official information about the Arizona Department of Revenue School Tax Credit. You'll also find the links to the list of schools eligible for this type of contribution.

Tip: An individual can claim public school and a school tuition tax credits in the same year.

Important Disclaimer: I am not a tax adviser or an accountant. I do not represent the Arizona Department of Revenue or the Arizona Department of Education. Please consult a tax professional regarding Arizona tax credits.

All tax information mentioned herein is subject to change without notice.

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