Arizona State Tax Credits Vs Federal Tax Credits And Deductions
While the state of Arizona permits both tax credits and tax deductions for charitable gifts, IRS rules stipulate that charitable gifts both cash and property must be claimed as tax deductions, rather than credits. In fact, page 3 of IRS Publication 526 spells this out plainly, Generally, you can deduct contributions of money or property you make to, or for the use of, a qualified organization. The IRS only allows deductions for gifts made to qualified tax-exempt organizations, such as 501 entities and other eligible organizations IRS Publication 526 covers this in detail.
The Working Poor Tax Credit
History lesson: the tax credit for gifts to Qualifying Charitable Organizations dates back to 1998, and used to be called the Working Poor Tax Credit. In the tax year 2012, this credit was expanded to include certified charitable organizations that provide immediate basic needs to Arizona residents who receive temporary assistance under benefits for needy families, are low income Arizonans or are children who have a chronic illness or physical disability, said Ed Greenberg, a spokesman for the Arizona Department of Revenue. Now, this credit is part of the Arizona Charitable Tax Credit umbrella term that is used to describe the tax credits for gifts to both QCOs and QFCOs.
Arizona Tax Credits: Eligible Charitable Contributions
Arizona law provides a number of tax credits. A credit counts dollar-for-dollar against your state income tax liability. Instead of writing a check to the Arizona Department of Revenue, you write checks to charities, and reduce what you owe in Arizona taxes by the amount of your contribution.
|Donations to Qualifying Charitable Organizations
|Donations to Qualifying Foster Care Charitable Organizations
|Donations to certified School Tuition Organizations
|Donations to private School Tuition Organizations
St. Vincent de Paul Phoenix , St. Marys Food Bank , St. Joseph the Worker , Housing for Hope , Maggies Place and 1st Way Pregnancy Center are Qualifying Charitable Organizations. Each approved QCO has a five-digit code that you enter on Form 321. A complete list of QCOs is HERE.
Catholic Charities Community Services is a Qualifying Foster Care Charitable Organization. Each approved QFCO also has a five-digit code that is entered on Form 352. A complete list of QFCOs is HERE.
and Both Catholic Education Arizona and the Brophy Community Foundation are certified School Tuition Organizations. You can direct your credit to a particular school , or allow the STO to distribute. To claim the original private credit, file Form 323. To claim the certified credit, file Form 348. A complete list of STOs HERE.
A separate credit is available for donations or fees paid to public schools . File Form 322.
Read Also: Food Bank In New Jersey
How Your Money Is Used
Giving to AzFBN is effective!
Because we work with economies of scale your financial gifts to AzFBN go a long way. Because we deal with semi tractor-trailer loads of food, a little goes a long way! Of course your donations support hunger fighting programs, too, as we work toward a vision of a hunger free Arizona.
What Is A Qualifying Charitable Organization
The Arizona Department of Revenue defines Qualifying Charitable Organizations as those that provide immediate basic needs to residents of Arizona who receive temporary assistance for needy families benefits, are low income residents of Arizona, or are children who have a chronic illness or physical disability. QCO organizations are also required to spend at least half of their annual budgets on qualified services for qualified Arizona residents, according to ADOR.
Lets clarify a couple of these QCO requirements.
Temporary Assistance for Needy Families
First, TANF is a federal program that provides grant money to states. The program has a variety of goals, and income eligibility for TANF is determined at the state level. States utilize the federal governments grant funding, often in the form in direct cash assistance, in order to help needy families meet basic needs.
Also Check: Food Banks In Kissimmee Florida
How The Arizona Charitable Tax Credit Shifts Control To Taxpayers
The Arizona Charitable Tax Credit gives taxpayers more choice in how their tax dollars are allocated. Consider the example of a single taxpayer who makes a $400 donation to an eligible Qualifying Charitable Organization, and a second $500 gift to a Qualifying Foster Care Charitable Organization. The taxpayer then claims the maximum allowable credit for these contributions , reducing their state tax liability, dollar-for-dollar.
This taxpayer has effectively redirected $900 of her State tax payment from the States general fund to the two charitable organizations of her choice. This is the underlying benefit of the Arizona Charitable Tax Credit it shifts control away from the State and gives individuals the power to determine which deserving organizations will receive tax revenue. Taxpayers themselves can direct tax dollars to charities whose services they believe provide the most value to their local communities.
This program grows in popularity each yearand for good reason. The impact on the community continues to increase between 2011 and 2016, twice the number of taxpayers in Arizona claimed the credit, awarding more than $34 million to qualifying charities.
Additional Arizona State Tax Credits That You Need To Know About
The state of Arizona offers additional state tax credits that allow taxpayers to contribute to a variety of charitable organizations and specify how a portion of their tax dollars are allocated. Note that these tax credits are independent, so taxpayers can take advantage of multiple tax credits on the same tax return.
Also Check: Food Banks In Baltimore City
Utilizing The Arizona Charitable Tax Credit Through Payroll Withholding
Are you interested in an easier way to give to your favorite qualifying charity? On both Arizona Form 321 and Arizona Form 352, you are permitted to record charitable contributions made through payroll withholding, provided that your employer is able to withhold contributions to eligible Arizona Charitable Tax Credit organizations from your pay. Be sure to contact your employer prior to setting up donations through payroll withholding.
Lack Of Consistent Access To Adequate Food Is A Problem 2 Million Arizonans Are Faced With Every Year 1 In 4 Children 1 In 5 Arizonians And 1 In 7 Seniors Live In Poverty
In Arizona, nearly 30% of our neighbors are considered working poor, living on wages that barely cover housing and other basic necessities. With little money to spare for food, many in our community – friends,family, coworkers – often go without food for meals at a time and have no other choice than to purchase the cheapest, sometimes expired, groceries to feed themselves and their families.
Poverty is a very real problem for Arizonans, but together we can find a way to ease the burden on our hungry neighbors. Help us work towards ending hunger in our community.
Camelback Subaru needs your help to become a Camelback Difference Maker with us. So far we’ve donated 98,094 meals to St. Mary’s Food Bank through Feeding America. We don’t want the donations to stop there.
Read Also: How To Donate To Local Food Bank
The 2022 Definitive Guide To The Arizona Charitable Tax Credit
Everything you need to know to take advantage of the Arizona Charitable Tax Credit, updated for the 2021 tax year
The state of Arizona provides a variety of individual tax credits, including the Arizona Charitable Tax Credit and the Public School Tax Credit. These tax credits allow taxpayers to make charitable contributions and receive dollar-for-dollar reductions in their Arizona state tax liabilities.
Youve probably heard of the AZ Charitable Tax Credit, but dont know all the details about it. Thats okay! Most taxpayers do not know how to take full advantage of Arizonas state tax credits, including the ability to combine multiple tax credits and carry forward the tax benefits over several years. Youre not alone.
Fortunately, this is the ultimate guide to the Arizona Charitable Tax Credit in 2022 a true deep dive into the details. Taxpayers will find everything they need to know in order to take advantage of this and other Arizona state tax credits. Read on to learn more, and then consult with your tax advisor for advice on your specific tax situation.
No problem. Download a copy now so you can read up when its convenient for you.
Arizona Standard Deduction Adjustments
In 2019, the passage of Arizona HB 2757 introduced adjustments to Arizonas standard deduction amounts, aligning them with the federal standard deduction. For single and married taxpayers, Arizonas standard deduction was increased to $12,200, from $5,312 a 130% increase. For head of household filers, Arizonas standard deduction was raised to $18,350, from $10,336 . And for married taxpayers, Arizonas standard deduction was boosted to $24,400, from $10,336, a whopping 136% hike.
To allay fears that increasing Arizonas standard deductions could curb charitable giving, Arizona HB 2757 also stipulates that the Arizona standard deduction can be increased by 25 percent of the charitable deductions the taxpayer would have claimed if they had itemized their deductions, according to Ed Greenberg of the Arizona Department of Revenue. This increase ensures that taxpayers who would have otherwise donated and claimed those gifts while itemizing their tax deductions will still be incentivized to make charitable contributions.
Wood/patel Raises Food Donation For St Marys Food Bank Alliance
Wood/Patel Raises Food Donation for St. Marys Food Bank Alliance
Wood/Patel raised over 4,180 pounds of food, diapers, and home goods for St. Marys Food Bank Alliance in addition to our biweekly monetary donations. If you would like to get in the charitable holiday spirit, visit St. Marys and qualify for a state charitable tax credit for up to $800!
St Marys Food Bank Alliance
- EIN: 23-7353532
- Food Banks, Food Pantries
- Nonprofit Tax Code Designation: 501 Defined as: Organizations for any of the following purposes: religious, educational, charitable, scientific, literary, testing for public safety, fostering national or international amateur sports competition , or the prevention of cruelty to children or animals.
- Donations to this organization are tax deductible.
- More Resources:
- Get notifications:
Read Also: Community Food Bank Of Southern Az
Public School Tax Credit
The Public School Tax Credit is a nonrefundable credit for cash contributions to Arizona public schools, including the direct payment of certain types of public school fees, which are outlined in the instructions for Arizona Form 322. This credit was created for individual taxpayers , who can donate to a public school so they can utilize that towards their extracurricular activities sports, art, music, according to Stefan Swiat of the Arizona Department of Education.
However, the scope of this tax credit has expanded, starting with 2019 tax year, according to Ed Greenberg of the Arizona Department of Revenue. He notes, For public schools, one change for this tax filing season is that an individuals contribution to a public school can now go to more than just extracurricular activities, such as acquiring certain capital items such as books and equipment, community school meal programs, student consumable health care supplies and playground equipment. This change is in effect until June 30, 2022.
Relevant Contact Information For The Arizona Charitable Tax Credit
If youve made it this far and still have questions, then youre probably wondering who you can call for help. Please remember: call a tax advisor first, to discuss your specific situation. If you need recommendations for a good tax advisor, then contact us here at Phoenix Childrens. We will be happy to point you in the direction of a tax consultant who is well-versed on the details of the Arizona Charitable Tax Credit.
Don’t Miss: Food Bank Of North Central Arkansas
Arizonans And Local Food Bank Can Benefit From Charitable Tax Credit
Donating to a local food bank before the end of 2015 will help feed the hungry and help you at tax time.
Arizonas charitable tax credit means married couples can receive a tax credit for a donation up to $400. It is a maximum of $200 if you are single.
For St. Marys Food Bank in Phoenix, every dollar donated equals seven meals for Arizonas hungry. $400 means even more.
Youre talking about 2,800 meals which could be provided by a $400 tax credit, said Jerry Brown, director of public relations for St. Marys Food Bank.
Brown said those donations go a long way not just during the holiday season but throughout the upcoming year. He said about 40 percent of yearly donations are received in November and December.
The fact of the matter is people dont think of making those donations as much during the other 10 months of the year as they do in November and December, Brown said. We try to provide what we can during the holidays but stretch those donations as far as we can into the new year.
If you want to take advantage of the charitable tax credit, you must make a donation by New Years Eve. Donate to St. Marys here.
We want to hear from you.
Have a story idea or tip? Pass it along to the KTAR News team .
The Irs Deadline For Federal Credits And Deductions Differs From State Deadlines
IRS deadlines are different from Arizonas state deadlines, however. The IRS specifies that, in order for contributions to be deductible on federal tax returns, contributions must be made . Keep this in mind when planning your charitable contributions and estimating your state and federal tax credits and deductions, and be sure to consult with your tax advisor regarding the optimal timing of your charitable gifts.
Also Check: Food Bank Of Iowa Volunteer
Five Year Carry Forward Period
The Arizona Charitable Tax Credit permits any credits for contributions to QCOs and QFCOs that are not applied against tax obligations for the most recent taxable year to be carried forward for a period of five consecutive years. However, the instructions for Arizona Form 321 and Arizona Form 352 both contain an important, identical caveat: You may carry over only that portion of the credit that you do not apply to tax. You cannot carry over any amount that you gave that was more than the maximum amount allowed as a credit.
Lets clarify this limitation with an example. Consider the case of a single taxpayer with an Arizona state liability of $700, who had contributed $500 to a QFCO and $1000 to a QCO in the most recent taxable year. In order to offset their $700 tax liability, this individual may claim the $500 maximum allowable tax credit for a gift to a QFCO and a $200 tax credit for the QCO gift . Since these two credits completely offset the $700 tax owed, the taxpayer now owes the state of Arizona nothing .
List Of Qualifying Charitable Organizations And Qualified Foster Care Charitable Organizations
Each year, the Arizona Department of Revenue updates its list of the qualifying charities that meet the Departments certification requirements. Greenberg notes that its important for Arizona taxpayers to review this list, stating, The Department of Revenue recommends taxpayers considering a tax credit donation confirm the organization has been certified by the agency as a qualifying charitable organization before making the donation if it is for tax purposes.
Phoenix Childrens Hospital is a 501 organization that meets the state of Arizonas QCO certification requirements, qualifying the Hospital to receive charitable contributions under the Arizona Charitable Tax Credit.
Also Check: Good Shepherd Food Bank Hampden
How Does The Arizona Charitable Tax Credit Work
St Marys Food Bank Feeding Those In Need For Over 50 Years With Your Arizona Charitable Tax Credit Donation
Your donation to St. Marys Food Bank will help Arizona children and families. Donate up to $800 and get it back with the Arizona Charitable Tax Credit.
St. Marys Food Bank is a 501 organization certified on the Department of Revenues website as an approved charity on the Arizona Charitable Tax Credit List. When you make a gift to St. Marys Food Bank, your donation can be applied to the Arizona Charitable Tax Credit.
If you would like to read more about the Arizona Charitable Tax Credit, read more below, and visit the Arizona Department of Revenue. Or consult a qualified tax advisory for personal tax advice.
Donate Now and Get it Back on Your Arizona Tax Return.
Read Also: Larimer County Food Bank Donations
What Is A Qualified Foster Care Charitable Organization
Qualifying Foster Care Charitable Organizations meet all the requirements listed above for QCOs, but with one additional condition. A QFCO charity must spend at least 50% of its budget on services for children who have been placed in foster homes or child welfare agencies, according to the instructions for Arizona Form 352.
What Is Low Income In Arizona
Next, low income sounds like a subjective term, and to some extent it is the income threshold for receiving cash assistance from TANF in Arizona differs from the income limit for Arizona Health Care Cost Containment System eligibility, for example but the states underlying purpose is clear. The Arizona Charitable Tax Credit is intended to spur donations to charitable organizations that provide a significant number of services for Arizona residents experiencing financial insecurity.
Also Check: Community Food Bank Tucson Az