Arizona's Permitted Charitable and Educational Tax Credits

Person filling out income tax form

Arizona Tuition Organization  

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.

Qualifying Charitable Organizations Contributions

As of the 2013 tax year: You do not have to itemize deductions to claim a credit for contributions to a Qualifying Charitable Organization or Qualifying Foster Care Charitable Organization. However, 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. You must also total your nonrefundable individual income tax credits on Form 301.

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.

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.

Qualifying Foster Care Charitable Contributions

As of 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.

 Donations to qualifying foster care charitable organizations must be claimed on Arizona Form 352. You must also total your nonrefundable individual income tax credits on Form 301.

Public School Tax Credits

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 would report that contribution on Arizona Form 322.

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 extracurricular 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.

Individual Private School Tuition Tax Credit

Contributions to qualified private schools under this program are used to fund scholarships for tuition or grants. Credit for Contributions to Private School Tuition Organizations are reported on Form 323, and Credit for Contributions to Certified School Tuition Organizations are reported on Form 348.

Important Disclaimer: The writer is not a tax adviser or an accountant. We 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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