Did you know that Arizona residents have choices when it comes to their state tax dollars? Because of four awesome tax credits, Arizona taxpayers have the option to redirect their tax dollars to deserving organizations.
If you are filing your 2022 tax returns you still have time to take advantage of these credits!
What is a tax credit?
A tax credit reduces the amount of taxes you owe dollar-for-dollar. For example, if you have a tax liability of $1200 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.
In contrast to a tax deduction, a tax credit is a bigger deal. A tax deduction only lowers your taxable income, while a tax credit puts money in your pocket.
What Arizona tax credits are available in 2022?
Here is a breakdown of four popular tax credits for 2022:
|Tax Credit Name||Single Filer Cap||Married Filer Cap||Organization List|
|Private School Tuition Organization||$1,243||$2,483||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: $1,243 for single filers; $2,483 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.
Note: Read about the great things that Midwest Food Bank and City Hope are doing for Gilbert and the surrounding areas. Consider using your tax credit for these organizations!
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.
Didn’t I need to donate by December 31? The deadline to contribute for most of the tax credits is the tax filing deadline (April 18, 2023). If you plan to claim the donations as charitable contributions on your Federal taxes, those must be taken in the calendar year of the donation. So, any contribution you make in 2023 (even if it’s taken as a 2022 Arizona tax credit) can be added on your 2023 itemized deductions as a charitable contribution.
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. Depending on the credit, you might be able to “carry forward” any unused credit to the next year.
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.
Do I have to itemize deductions to claim any of these tax credits? No.