Arizona offers many opportunities to claim tax credits for Qualifying Charitable Organizations, including Foster Care tax credits on Arizona personal income tax. Also, there are credits for donating to public schools and Certified School Tuition Organizations.
Contributions to Qualifying Charitable Organizations and Qualifying Foster Care Charitable Organizations
Arizona provides two separate tax credits for individuals who make contributions to charitable organizations: one for donations to Qualifying Charitable
Organizations (QCO) and the second for donations to Qualifying Foster Care Charitable Organizations (QFCO). Individuals making cash donations made to these charities may claim these tax credits on their Arizona personal income tax returns.
Effective in 2016, credit eligible contributions made on or before the 15th day of the fourth month following the close of the taxable year may be applied to either the current or the preceding taxable year and are considered to have been made on the last day of that taxable year.
Effective in 2018, the Arizona Department of Revenue has assigned a five (5) digit code number to identify each Qualifying Charitable Organization and Qualifying Foster Care Charitable Organization for Arizona tax credit purposes on Form 321 and Form 352, which is included with the Arizona income tax return. Taxpayers must use the “QCO Code” or “QFCO Code” of certified organizations to claim the tax credits for contributions QCOs or QFCOs. The department’s lists of qualifying charities include the code assigned to each organization.
Credits for Contributions to Certified School Tuition Organizations
Arizona provides tax credits for contributions made to Certified School Tuition Organizations which provide scholarships to students enrolled in Arizona private schools. Credits are available for donations made by individual taxpayers and for donations made by corporate taxpayers.
Individual Taxpayers
Two separate nonrefundable tax credits are available to individuals for contributions made to a Certified School Tuition Organization which provides scholarships for students enrolled in Arizona private schools. An individual who is a shareholder of an S corporation may also claim two separate nonrefundable credits for contributions made by the S corporation when the S corporation qualifies for a corporate credit and elects to pass the credit through to its individual shareholders.
Credit for Contributions to Private School Tuition Organizations (Original Individual Income Tax Credit)
For tax year 2021, the maximum credit allowed is $611 for single, heads of household and married filing separate filers and $1,221 for married filing joint filers.
Credit for Contributions to Certified School Tuition Organizations (Switcher Individual Income Tax Credit)
The tax credit is is available to individual taxpayers who donate the maximum amount allowed under the Credit for Contributions to Private School Tuition Organizations and make an additional donation to a Certified School Tuition Organization. For tax year 2021, the maximum credit allowed is $608 for single, heads of household and married filing separate filers and $1,214 for married filing joint filers.
Credit for Business Contributions by an S Corporation to School Tuition Organizations
The tax credit is available for individual shareholders to claim their pro rata amount of contributions made by an S corporation to a Certified School Tuition Organization.
Credit for Business Contributions by an S Corporation to School Tuition Organizations for Displaced Student or Students with Disabilities
This tax credit is available for individual shareholders to claim their pro rata amount of contributions made by an S corporation to a Certified School Tuition Organization.
Public School Tax Credit
Taxpayers Making Contributions or Paying Fees
An individual may claim a nonrefundable tax credit for making contributions or paying fees directly to an Arizona public school for support of eligible activities, programs, or purposes as defined by statute. The maximum credit allowed is $400 for married filing joint filers and $200 for single, heads of household and married filing separate filers.
For the purpose of claiming Arizona’s tax credit for contributions made or certain fees paid to a public school, the Arizona Department of Revenue now requires taxpayers report the school’s County Code, Type Code, and District Code & Site Number (CTDS) number on Form 322, which is included with the Arizona income tax return.
The CTDS is a nine (9) digit number that the Arizona Department of Education uses to identify Arizona public and charter schools.
Credit for Donations to Military Family Relief Fund
The Arizona Department of Veterans’ Services offers a nonrefundable individual tax credit for cash donations made to the Military Family Relief fund.
Contact one of our accountants or CPAs about questions regarding how to take advantage of these tax credits.