As an Arizona taxpayer, you have a unique opportunity to direct your tax money to schools and charities you support.
You have to make a donation up front, but — provided you stay within prescribed limits — you get every dollar back in the form of a tax credit.
If you make every possible donation, married couples filing jointly can give $4,773, and all other taxpayers can give $2,387 — and get it all back.
You can’t claim more than you owe in state taxes, but — with the exception of the Military Family Relief Fund Credit — unused credits can be carried forward for five years until used.
Here are some common questions about the process:
What’s new this year?
- Credits have doubled for donations given to charities that support the working poor or chronically ill or disabled children. Married couples filing jointly can claim a credit for donations up to $800, and all filers can claim a credit on donations up to $400. Also, maximum donations to foster-care organizations are up significantly and maximum donations to private school tuition organizations are up slightly.
- Donations to all those charities can be made by April 18, 2017 — donors who give between Jan. 1 and April 18, 2017, can choose whether to claim the credit on their 2016 or 2017 tax return. (Note: The Arizona Military Family Relief Fund reached its $1 million cap Nov. 21. Contributions after that will be returned.)
- In previous years donations to Qualifying Charitable Organizations and to foster-care organizations were claimed on the same tax form. For the 2016 tax year, the donations require separate tax forms and have separate rules.
What kinds of tax credits can I get for donating to schools or charity?
You can claim a tax credit for donations made to K-12 public schools, including charter schools, and to School Tuition Organizations, which provide scholarships to private schools.
You can also get a tax break for making donations to a qualified charitable organization or foster-care organization, or to the Arizona Military Family Relief Fund, which provides financial assistance for active duty service members, post 9/11 veterans and their families.
Do I have to choose one category or can I give to all of them?
You can donate up to the maximum amount allowed in each category.
Can I make more than one donation within each category?
Yes, but you need to stay within the limit for each category to get your donation back as a dollar-for-dollar credit.
Can I get a credit for donations made that exceed how much I owe in taxes?
Sorry, but no. If your tax liability — the amount of taxes you owe for a given year — is less than your donation, the credit can only be used to reduce your liability to zero. You can’t get an additional refund. Any unused tax credits can be applied to future tax years, but not for more than five consecutive years.
If I claim a tax credit, can I also write off the donation on my taxes?
Generally, donations claimed as a tax credit cannot also be used as an itemized deduction on your Arizona income tax return. But there are some exceptions depending on your individual situation. See a tax professional for help with this one.
Once I make the donation, how do I get the credit?
If you donate to a public or private school or to a qualifying charity, you claim a credit on your state income tax return. Use Form 322 for donations to public schools, Form 323 for donations to private schools, Form 348 for additional donations to School Tuition Organizatons, Form 321 for donations to charitable organizations, Form 352 for donations to foster-care organizations and Form 340 for donations to the Arizona Military Relief Fund. Make sure the organization qualifies for the tax credit before you give.
When is the deadline?
Donations to the Arizona Military Relief Fund must be paid on or before December 31, 2016 to qualify for the tax credit. (For federal tax deduction purposes, donations are deductible only in the year paid.) Contributions in all other categories must be paid on on before April 18, 2017 — those made between Jan. 1 and April 18, 2017 can be claimed on your 2016 or 2017 Arizona income tax return.