If you pay Arizona state tax, you may be eligible for the five Arizona tax credits outlined below. If eligible you could receive a dollar-for-dollar credit against Arizona state taxes owed by donating.
In addition these donations count as charitable contributions and may be deducted on your federal return if you itemize your deductions. Therefore, it is possible to get paid to make a charitable donation!
Example Married: Make all four tax credits for a total of $2,234. Get a dollar for dollar credit against state taxes owed for $2,234. If you itemize, take a federal deduction for $2,234. This saves you $335 in fed tax at the 15% bracket/ $559 at the 25% bracket.
Example Single: Make all four tax credits for a total of $1,117. Get a dollar for dollar credit against state taxes owed for $1,117. If you itemize, take a federal deduction for $1,117. This saves you $168 in fed tax at the 15% bracket/ $279 at the 25% bracket.
It makes sense to contribute up to the amount of your expected Arizona tax liability. Meaning if you are married, and you expect to pay $3,000 in Arizona state tax, fund all $2,234 of the tax credits. If you are married and only expect to pay $1,000 in Arizona state tax, fund $1,000 of tax credits but no more than that. (Credits can be carried forward five years, so not to worry if you end up with more credit than tax.)
We encourage you to use these tax credits up to the amount you may owe in AZ state tax by making your donations before December 31, 2013, although last year some donations accepted up until April were allowed to be applied to the previous tax year.
- You can find a great explanation of each credit in the Arizona Tax Credit article on About.com.
- You can also find information on the Arizona Dept of Revenue state tax credit page.
Below are links you can use to make donations and make use of the 5 different credits.
1. Military Family Relief Fund Credit, $200 limit for single filers/ $400 for joint.
This credit fills up fast. They are allowed to take $1M of donations. Last we looked they were at about $550,000 (as of 11/15/13). Act fast on this one by using the link below.
2. Credit for Contributions to a Qualifying Charitable Organization, $200 limit for single filers/ $400 for joint
Listed below are potential charities for you to chose from. If you would like to pick your own, you can use this list of qualifying charitable organizations, or we have provided additional links to specific qualifying organizations below. (Starting with the 2013 tax year, you do not have to itemize deductions to claim a credit for contributions to a qualifying charitable organization. For 2012 and prior, you were required to itemize deductions on your Arizona return in order to claim a credit for contributions to a qualifying charitable organization.)
- Defenders of Children
- Area Agency on Aging in Phoenix
- Arizona Center for the Blind & Visually Impaired
- Jewish Family & Children’s Service
3. Public School Credit, $200 limit for single filers/ $400 for joint
- Unified School Districts (Scottsdale)
- Unified School Districts (Mesa)
- Or use this link to find a school in your area
4. Private School Credit, $517 limit for single filers/ $1,034 limit for married filers
We have listed a few links below for general donations, or you may chose to donate to a specific child that you know attending a private school. If you would like the names of a few children that could benefit from donations, please feel free to email us and we can send you a few suggestions.
Try this link for a list of schools that qualify.
5. FOR HIGH INCOME EARNERS
In 2012 Arizona signed the Overflow/PLUS tax credit law, allowing donors to receive credit for a contribution over and above the original tax credit that can be claimed on Form 323. The Arizona taxpayer must first be able to donate the $1034 (married) or $517 (single) maximum for the original tax credit in order to donate an additional amount to the Overflow/PLUS tax credit up to another $1028 married/$514 single. The additional tax credit for contributions to certified school tuition organizations-individuals is claimed by the individual taxpayer on Form 348 . If the taxpayer has actual Arizona state income tax less than the maximum allowable, the available credit in a given year is limited to the actual tax. The tax law allows a carry forward for up to five years if a donation is made in excess of the actual state income tax due.
Additional info and links to make donations below:
- Arizona Christian School Tuition Organizations, Inc.
- Jewish Tuition Organization
- Christ Lutheran School:
- Catholic Tuition Organization
- Arizona Scholarship Organization
We are not endorsing or promoting any of these organizations. Information is provided for your convenience so you have no excuse for not saving yourself some tax money!
As always, with tax advice, we advise you to consult with your own tax preparer before making any tax related decisions.