Arizona taxpayers have a choice when it comes to their tax credits. Taxpayers have the option to give tax money to the state or to deserving organizations through charitable donations.
A tax credit reduces the amount of taxes you owe dollar-for-dollar. For example, if you owe $1200 in state taxes but choose to make a $1000 donation under the Foster Care Charitable Organization tax credit, your tax bill will decrease by $1000—meaning you will only owe $200 in taxes.
Here is a breakdown of four popular tax credits for 2019:
|Tax Credit Name||Single Filer Cap||Married Filer Cap||Organization List|
|Private School Tuition Organization||$1,135||$2,269||School Tuition Organizations|
|Public School Tax Credit||$200||$400||Public School List|
|Qualifying Charitable Organization||$400||$800||Qualifying Charitable Organizations|
|Foster Care Charitable Organization||$500||$1,000||Foster Care Organizations|
Private School Tuition Organization
Purpose: Helps families send their kids to private schools!
Amount: $1,135 for single joint filers; $2,269 for married joint filers.
Note: There are two tax credits (Original Tax Credit and Switcher Tax Credit). These totals represent the totals of both credits.
Tax form: Form 323 and Form 348
Public School Tax Credit
Purpose: Supports extracurricular activities or character education programs sponsored by public or charter schools.
Amount: $200 for single filers; $400 for married joint filers.
Note: Extracurricular activities are school-sponsored activities that require students to pay a fee to participate (i.e. band or athletics).
Tax form: Form 322
Qualifying Charitable Organization
Purpose: Provides funds for organizations that serve low-income, chronically ill, or physically disabled children in Arizona.
Amount: $400 for single filer/$800 for married joint filers.
Tax form: Form 321
Qualifying Foster Care Charitable Organization
Purpose: Provides funds for organizations that serve the foster care community.
Amount: $500 for single filers; $1,000 for married joint filers.
Tax Form: Form 352
Frequently Asked Questions
If I normally get a refund, can I still take advantage of these tax credits? Yes! A refund means you’ve overpaid throughout the year. This doesn’t necessarily mean you don’t have a tax liability. Claiming these tax credits can mean an even higher refund.
Do I need to donate by December 31? The deadline to contribute for most of the tax credits is the tax filing deadline (April 15, 2020). However, donating by December 31 ensures you can still count your charitable donation as a deduction on your federal taxes for 2019.
Can I claim my donation as a tax credit and as an itemized deduction? While you can claim a charitable donation as an itemized deduction on your federal taxes, you must remove it from your state itemized deduction if you are claiming it as a tax credit.
What if I donate more than my state tax liability? You cannot claim a credit for more than your tax liability. For example, if you donate $1,000 using the Foster Care Organization tax credit while your state tax liability is only $800, you can only claim an $800 tax credit. You can, however, claim the extra $200 as an itemized deduction. You can also carry forward any unused credit for five years (except for the Military Family Relief Fund credit).
What’s the difference between a deduction and a credit? A deduction reduces the amount of your taxable income. A tax credit reduces your tax liability dollar-for-dollar. A tax credit is always better than a tax deduction. For a taxpayer in the 25% tax bracket, a $1,000 tax deduction means a savings of $250 ($1,000 x 25%) while a $1,000 tax credit means a savings of $1,000.
Do I have to itemize deductions to claim any of these tax credits? No.