The end of the year is quickly approaching, and it’s that time of year where we encourage our clients, friends, and family to give to their favorite charities.  For many Arizona charities, your donation could very likely equal a dollar-for-dollar Arizona tax credit, meaning it is of no additional cost to you to make these tax-credit qualifying donations. 

The State of Arizona offers tax credits to individuals that make charitable contributions to certain organizations and public schools. Because they are credits, you do not need to itemize your deductions to get a benefit from these contributions, unlike charitable contributions on your federal tax return. Each of these tax credits provides a dollar-for-dollar reduction of your Arizona tax liability (up to your tax liability, subject to the below thresholds). These tax credits effectively redistribute your Arizona taxes from the Arizona Department of Revenue to the charities of your choice.

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Contributions to Qualifying Charitable Organizations

Not every donation to a nonprofit organization qualifies for this tax credit. In order to be considered a Qualifying Charitable Organization (QCO), an organization must spend at least fifty percent of its budget to help Arizona residents that receive TANF benefits, are low income residents, or are chronically ill or physically disabled children.

The maximum amount of the credit for 2014 is $200 ($400 if married filing joint).

The Arizona Department of Revenue publishes a list of all QCOs each year. A list of Qualifying Charitable Organizations for 2014 can be found here.

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Contributions to Qualifying Foster Care Charitable Organizations

An additional credit is available for contributions made to Qualifying Foster Care Charitable Organizations (QFCO). In addition to meeting the requirements to be a QCO, a QFCO must spend at least fifty percent of its budget on services to foster children in Arizona.

The maximum amount of the credit for 2014 is $200 ($400 if married filing joint).

A list of Qualifying Foster Care Charitable Organizations for 2014 can be found here.

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Contributions to Umbrella Organizations

Umbrella Organizations collect donations and make contributions to other organizations.

Donations made to Umbrella Organizations can qualify for these credits as long as the donation is designated exclusively for one or more Qualified Charitable Organization or Qualifying Foster Care Charitable Organization.

A list of Umbrella Organizations for 2014 can be found here.

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Contributions to Public Schools

Arizona also provides a credit for fees paid or contributions made to a public school.  For purposes of this credit, charter schools are considered public schools.

The maximum amount of the credit is $200 ($400 if married filing joint).

The Arizona Department of Education keeps a listing of all public and charter schools in Arizona. You can search for a school in your area here.

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Contributions to School Tuition Organizations

In addition to public schools, Arizona also provides a credit for contributions made to a School Tuition Organization (STO).  An STO is an organization that provides scholarships to individuals attending a private school. Note, this credit allows taxpayers to make donations in the following year (until April 15th, 2015) where the credit can be applied to the 2014 Arizona tax.

The maximum amount of the credit for 2014 is $1,053 ($2,106 if married filing joint).

A current list of School Tuition Organizations can be found here.

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Contributions to the Arizona Military Family Relief Fund

The Arizona Military Relief Fund provides financial assistance to families of currently deployed and veteran military service members. Arizona provides a tax credit for contributions to this fund, but the credit is capped at one million dollars across all taxpayers per year. Because of this, we recommend making your donation early in the year if you choose to take advantage of this credit.

The maximum amount of the credit for 2014 is $200 ($400 if married filing joint).

More information about the Arizona Military Relief Fund can be found here. The donation form to make a contribution to the Arizona Military Relief Fund can be found here.

 

Sources:

http://www.azdor.gov/TaxCredits/QualifyingCharitableOrganizations.aspx

http://www.azdor.gov/TaxCredits/SchoolTaxCreditsforIndividuals.aspx

https://dvs.az.gov/military-family-relief-fund

As a general disclaimer, the information provided above is very general and broad in nature, is not represented as complete, and may not apply to taxpayers’ individual situations. We advise all taxpayers to consult a professional tax advisor regarding their own specific tax needs. 

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