The glitz and ho-ho-ho-ness of the holiday season are still underway, but we shouldn’t overlook the height of the charitable tax-credit giving season. It’s not the kind of thing you put up a tree or light a candle for, probably, and it doesn’t involve any sweaters so hideous they’re wonderful, but makes a huge difference to a lot of people in our community.
Here are the basics: You make a donation to a public school, school district, private school tuition organization and/or a qualified charitable organization that serves low-income Arizonans, those who are chronically ill or physically disabled children, or kids in foster care. To claim it on your 2013 taxes, the donation must be postmarked or made online by Dec. 31.
You can claim a good chunk of those donations under several tax-credit programs in Arizona. You take them as a tax credit, not a deduction, on your state tax return. That means it reduces the amount of taxes you owe dollar-for dollar. Say you owe $100 in state taxes — and you’ve made a qualifying tax-credit donation of $50 to an organization or school in 2013. Your state tax bill would be $50 instead of $100.
You can claim multiple categories of tax-credit donations, so you don’t have to choose between giving to schools or charitable organizations. New this year is a credit for donating to agencies that work with children in foster care.
Taxpayers can contribute to public schools, for example, and receive a tax credit of up to $200 for individuals or $400 for married couples filing jointly. If you donate online through a school district or organization, like the Community Food Bank of Southern Arizona, you should receive a receipt at the end of the transaction. Otherwise, make sure to request a receipt from the school or agency that takes your donation.
The Arizona Department of Revenue explains the tax-credit categories (remember that you can donate to more than one), the dollar amounts allowed and lists charitable organizations that qualify to receive tax-credit donations.
It all sounds well and good, especially with the public school tax credits, which are an easy way to support education and enjoy a tax benefit. And it is. But it’s also not that straightforward because of limitations on what the tax-credit donations can be used for — non-classroom activities like music and sports, field trips and character education. It certainly helps, by lifting the burden on the school budget to pay for those things, but it’s not an overall fix to Arizona’s underfunding of public education.
The flip side is that the tax-credit program comes at a wider cost. Money returned to individual taxpayers through tax credits doesn’t go to the state’s general fund, the pot of money that pays for public education and other government expenses. Almost $52 million was diverted from the general fund through tax credits last year, the Arizona Republic reported recently.
It should not come as a surprise that schools in affluent areas receive the most tax-credit donations. An analysis by the Arizona Republic, for example, found that Catalina Foothills High School raised $918,827 in from 4,296 tax-credit donations in 2012 — the most of any public school in the state. Much of the money goes to pay for athletics, according to the Republic’s report..
Catalina Foothills High School is in a part of Tucson that enjoys higher household incomes than the rest of the metropolitan area, which makes it easier for families to afford their contributions. Neighborhoods in the center or southside of the city don’t have the same financial base, and their tax credit collections suffer for it.
School districts, like Tucson Unified, make it easy to find a school in need — there’s a list on the homepage, and the district has identified middle school sports as an overall need. It’s a good way to spread the wealth around and make sure you’re contributing to a school community that truly needs the help to provide its students with the well-rounded educational experience that kids in wealthier districts can take for granted.
Arizona is full of schools and charitable organizations doing good work to help our communities. Making a donation can help make our communities stronger.