Irs Deadlines For Federal Tax Credits Are Different Than Deadlines For State Tax Credits
The Internal Revenue Service has different deadlines for federal taxes than the state of Arizonas Tax Credit deadline.
According to the IRS, in order for you to see a reduction in your federal taxes, your charitable giving needs to be done before the end of your tax year. You can read more details on this here.
Private School Tuition Organizations Form 323
The tax credit for contributions to a School Tuition Organization is $1,221 formarried filing joint and $611 for all other taxpayers. The credit is available for a contribution that provides scholarships or grants to qualified elementary and high schools. Your contribution cannot be designated for the direct benefit of your dependent but can be made to benefit a relative or any other student if they are not your dependent. Before making your contribution, make sure that the organization meets the rules set out by the Arizona Department of Revenue to qualify as a School Tuition Organization. Here is a link to the list of the 2021 qualified School Tuition Organizations. The organization should give you a receipt showing the name and address of the school tuition organization, your name, the amount paid, and the date paid.
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.
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How Does The Tax Credit Work
Here are four steps to document your donation and claim your tax credit.
If a married couple owed $1800 in taxes and donated $800 to a qualifying charitable organization, their tax liability would be reduced to $1000.
The Main Takeaways For The Arizona Charitable Donation Tax Credit
There you have it! We covered the most important information needed to fully utilize the Arizona Charitable Tax Credit this 2021 tax year. A whole lot was covered, so to help you take it all in, the main points are summarized in this final section. This info should assist you as you plan your charitable giving and calculate the tax credits and deductions for your state and federal taxes for 2021.
The Primary Tips and for the Arizona Charitable Tax Credit
- The Arizona Charitable Tax Credit is a dollar-for-dollar tax credit that reduces the taxpayers tax liability .
- Any credits for charitable contributions to Qualifying Charitable Organizations and Qualifying Foster Care Charitable Organizations not claimed in a tax year carry forward up to five years.
- The maximum allowable credit that can be claimed for single taxpayers, married filing separately filers or heads of household filers for charitable contributions to QCOs is $400 and $800 for married filing jointly.
- The maximum allowable credit that can be claimed for single taxpayers, married filing separately filers or heads of household filers for charitable contributions to QFCOs is $500 and $1,000 for married filing jointly.
- Donations for the 2021 tax year can be made and claimed up until April 15, 2022.
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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.
Contact The Arizona Department Of Revenue
You can also reach out to the Arizona Department of Revenue for any additional questions. If you live in the Phoenix area, the number you would need to call is 255-3381. For those with the area codes of 520 and 928, please call their toll-free number which is 352-4090.
For any general questions about the Arizona Foster Care Tax Credit please call the Arizona Department of Revenues customer line at 255-3381. You can also find additional contact information such as address, fax address, individuals to speak with as well as a Live Chat option by going directly to AZDirect.AZ.gov.
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The Credit For Contributions To Private School Tuition Organizations
Known to many as the Private School Tax Credit, the Credit for Contributions to Private School Tuition Organizations is available for charitable cash gifts to private school tuition organizations that provide scholarships to private school students. The limits are set at 1,100 for married filing jointly and $555 for individuals. Like the other Public School Tax credit and the Arizona Charitable Donation Tax Credit, this tax credit is for individuals, it can be claimed through payroll withholding, it has a five-year carryover, and the deadline for gifts goes through April 15. Use Arizona Form 323 to claim this tax credit.The Credit for Contributions to Certified School Tuition OrganizationsThe is taxpayers who claim the maximum allowable credit on Arizona Form 323 for the Credit for Contributions to Private School Tuition Organizations and additionally make a charitable contribution to a certified School Tuition Organization. Reference Arizona Form 348 for the specific requirements and definition of a certified School Tuition Organization. Do note, however, that charter schools and programs run by charter schools do not qualify for this tax credit.
The maximum allowable limit for this tax credit is $1,103 for couples and $552 for individuals. The can be claimed through payroll withholding, it has a five-year carryover, and the deadline for gifts goes through April 15. Use Arizona Form 323 to claim this tax credit.
So How Exactly Can I Utilize The Arizona Charitable Tax Credit
The process for making a donation and claiming the Arizona Charitable Tax Credit is not too complicated! Essentially, there are only four steps needed to properly document your gift and claim your tax credits for Arizona:
To illustrate: if a single individual owes $1500 in taxes but donates $300 to a qualifying charitable organization, his or her tax liability will be reduced to $1200.
Say an AZ taxpayer makes a $400 gift to an eligible Qualifying Charitable Organization as well as a $500 donation to a Qualifying Foster Care Charitable Organization. The individual can then claim the credit for these donations, which, in this case, are the maximum amounts allowable . The two credits together total $900 which reduces the state tax liability dollar-for-dollar for $900.
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The Arizona Charitable Tax Credit General Information
Always consult your tax advisor for advice on your specific tax situation. Here are some general guidelines for using this tax credit.
- Donations must be made by individuals. Corporations, foundations, and any other incorporated entity do not qualify.
- Donations must be made in cash. Property donations and in-kind donations such as toys or services do not count.
- Gifts to charities that are non-certified are not eligible for the Childrens Care Arizona tax credit. All donations must be made to Qualified Charitable Organizations
What Is The Minimum I Can Donate To Receive A Tax Credit
The good news is that there is no minimum requirement when donating to a Qualified Foster Care Organization or a Qualifying Charitable Organization . If you would like to donate $2 to Christian Family Care, you can still receive a $2 tax credit which means $2 that you owed in state income taxes would be reallocated to support the work of Christian Family Care or whichever QFCO or QCO you decided to give to.
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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.
The Arizona Military Family Relief Fund Credit
The Arizona Military Family Relief Fund provides financial assistance to families of currently deployed service members and post-9/11 veteran and military families. There is a $1 million cap for annual donations. Donations are being accepted via mail until December 31. If you do donate and theyve reached their cap, you will receive your money back. The contribution amounts are $200 for single filers and $400 for joint filers.
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Using Payroll Withholding With The Arizona Charitable Tax Credit
On Arizona Form 321, you are permitted to record charitable contributions made through payroll withholding. Contact your employer before setting up donations through payroll withholding and find out if they are able to withhold donations to eligible Arizona Charitable Tax Credit organizations from your pay.
How The Arizona Charitable Tax Credit Gives Taxpayers The Power
Taxpayers choose how their tax dollars are allocated by using The Arizona Charitable Tax Credit. In the example of the married couple making an $800 donation to an eligible Qualifying Charitable Organization. The taxpayer claims the maximum allowable credit for their contribution, reducing their state tax liability, dollar-for-dollar.
The couple has effectively redirected $800 of their state tax payment from the states general fund to the charitable organization of their choice. It gives the taxpayers the power to determine which deserving organization will receive tax revenue. Charities like Childrens Care Arizona also allow you to recommend specific schools and programs for children giving you a chance to direct tax dollars where you believe they will provide the most value to your community.
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Top Takeaways: Arizona Charitable Tax Credit
In summary, Arizona taxpayers have a lot of options when it comes to utilizing state tax credits to reduce their Arizona state tax liabilities. But there is a lot of information to absorb in order to utilize these credits, especially the Arizona Charitable Tax Credit. Here are some of the key facts to know, along with links to the associated chapters above:
Now its your turn. Its time to take the information that youve learned above, donate to the state-certified charitable organizations of your choice, and utilize Arizonas state tax credits to control how a portion of your tax dollars are spent. And when youre evaluating charitable organizations, please consider donating to support Phoenix Childrens Hospital, a 501 organization that qualifies for the Arizona Charitable Tax Credit as a state-certified Qualifying Charitable Organization. Your donation helps deliver world-class care, close to home, for every child when they need it most.
The Difference In Tax Credits And Tax Deductions
For the purpose of our example, lets use the tax rate of 3%. Arizonas current income tax rates can be found on the IRS website.
A tax credit lowers an individuals tax liability . With every dollar an individual can claim as a tax credit, tax obligation is reduced by a dollar. A married couple making $60,000 owing $1800 in taxes and donating $800 to a qualifying charitable organization would have their tax liability reduced to $1000.
A tax deduction lowers an individuals taxable income. With every dollar an individual can claim as a tax deduction, taxable income is reduced by a dollar. A married couple making $60,000 owing $1800 in taxes and donating $800 to an uncertified charitable organization would have their taxable income reduced from $60,000 to $59,200. $59,200 taxed at 3% would mean the couples tax liability would be $1776, a significantly higher payment to the state of Arizona.
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Chapter 1 Understanding The Tax Credit
The Arizona Charitable Tax Credit is an individual income tax credit for charitable contributions to Qualifying Charitable Organizations or QCOs. It provides a dollar-for-dollar tax benefit, allowing taxpayers to reduce their state tax liabilities for each dollar donated to charities, up the maximum allowable limits. The maximum allowable credit is $400 for a person filing single, married filing separately, and head of household, or $800 for married filing jointly.
Irs Tax Forms For Tax Deductions
Use IRS Form 1040 to itemize federal tax deductions. Use IRS Form 8283 for Noncash Charitable Deductions. Use Arizonas Form 321 for QCO tax credits and Form 352 for QFCO tax credits. See section 2 above for other forms used for Arizona state tax credits.
How to Contact the Arizona Department of Revenue and Others on the Arizona Charitable Tax Credit
There are several points of contact you can utilize if you still have questions about the Arizona Charitable Donation Tax Credit. For example, if you have questions for a specific Qualifying Charitable Organization or Qualifying Foster Care Charitable just click the link provided in Section 3 above and click once more for that organizations website where you can quickly locate contact numbers. Furthermore, you can reach out with inquiries to Give Local. Keep Local. on our website here.
Arizona Form 321 and Arizona Form 352 Contacts
One Arizona Form 321 and Arizona Form 352, the two forms used for the Arizona Charitable Donation Tax Credit, two numbers are included for contact with questions about the credits.
- For Tucson and all 520 and 928 area codes, call 800-352-4090
- For Phoenix and all 602 area codes, call 602-255-3381
Contact the Arizona Department of Revenue
- Arizona Department of Revenue customer care line: 602-255-3381
- Arizona Department of Revenue general line: 602-255-3381
- Or visit the website at
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Tax Credits Vs Tax Deductions
Before we go any further, its important to draw a distinction between tax credits and tax deductions. Credits and deductions differ in how they impact an individuals tax obligations.
A tax credit reduces an individuals tax liability on a dollar-for-dollar basis. For every dollar an individual claims as a tax credit, her tax obligation is reduced by a dollar. In contrast, a tax deduction reduces an individuals taxable income. For every dollar an individual claims as a tax deduction, her taxable income is reduced by a dollar. Based on the calculation from her income bracket, the individual pays a tax on the amount left over after deductions are subtracted.
Consider the example of a single taxpayer with $40,000 in taxable income and an effective Arizona State tax rate of 3 % . In this case, the taxpayers Arizona state tax liability is $1,200 .
Now lets assume this individual has donated $400 to a Qualifying Charitable Organization and $500 to a Qualifying Foster Care Charitable Organization then she takes the $400 maximum allowable tax credit for a gift to a QCO, and the $500 maximum allowable tax credit for a gift to a QFCO. In this scenario, these two tax would reduce the individual taxpayers liability by $900 , from $1,200 to $300. The individual would end up paying $300 to the State of Arizona.
Key Points For The Arizona Charitable Tax Credit
So that is what you need to know in 2022 in order to take advantage of the Arizona Charitable Tax Credit for the 2021 tax year. Its a lot of information to take in, and many readers will have skimmed this article, so a handful of key points about the tax credit are summarized below. Hopefully, the tips and information above will prove useful as you calculate your taxable income, plan your charitable contributions, and complete your state and federal tax forms for the 2021 tax year.
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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||$800/$400|
|Donations to Qualifying Foster Care Charitable Organizations||$1,000/$500|
|Donations to certified School Tuition Organizations||$1,131/$566|
|Donations to private School Tuition Organizations||$1,138/$569|
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.