For the 2012 Arizona Personal Income Tax Returns (Forms 140, 140A, 140EZ, 140PY and 140NR) there have been a number of significant changes for 2012.
Credit For Contributions to Private School Tuition Organizations
These have been indexed to $503 ($1,006 married filing joint). This is a useful credit if you wish to support a private school. I discussed this in my article on Useful Arizona Tax Credits.
NEW – Credit For Contributions to Certified School Tuition Organizations
This is a new credit for 2012 that works in conjunction with the Private School Tuition credit. It is $500 ($1,000 married filing joint) and can only be claimed if you have claimed the maximum Private School credit. Basically it is a way of contributing up to $1,003 ($2,006 married filing joint) to support private education and getting a dollar for dollar reduction in your taxes. Contributions made up to April 15, 2013 can be claimed in 2012.
NEW – Credit for Qualified Health Insurance Plans
From January 1, 2012 to December 31, 2014 there is a new Arizona tax credit for employers who provide qualified health plans or contribute to health savings accounts (HSAs) for employees who are Arizona residents. The credit is worth $360 for each qualified employee.
The starting point for Arizona income tax returns is the Federal adjusted gross income (AGI) and for itemized deductions it is the Federal Schedule A. As in prior years the Arizona legislature has not yet decided if it will adopt all of the 2012 Federal tax changes that affect AGI and Schedule A. They will do that during the 2013 session.
As you may not know if Arizona has full conformity with Federal tax law by the time you file your Arizona tax return you have a number of choices. You could file an extension and wait for the conformity to be decided, assume conformity will be passed or assume conformity will not be passed. Each has their own pros and cons. I normally recommend clients assume that conformity will be passed. If for any reason it is not passed you can then file an amended return without penalties and interest, if the amended return is filed by October 15, 2014.
The standard deductions have been indexed for inflation to $4,833 for single and married filing separate, and $9,665 for head of household and married filing joint.
Use Tax No Longer Reported On Income Tax Return
This turned out to be a one hit wonder. I wrote about this in my article published on January 4, 2013.
Contributions to 529 College Savings Plans
These have been made permanent. So you can continue to deduct $750 ($1,500 for married filing joint) for contributions made in the year.
Citizens Clean Elections Fund Tax Reduction Repealed
This was where you would get a $5 ($10 for married filing joint) reduction in your tax just for ticking a box. It was good while it lasted but now it is gone. Similarly the tax credit for donations to the Clean Elections Fund has gone for donations made after August 2, 2012
Amended Tax Returns 140X
Starting with 2012 you have to use the specific year form 140X rather than the generic form that was available before.
Disclaimer – This article does not constitute personal tax advice to the reader and is only offering general information. You should seek professional advice for your own situation as the most appropriate tax planning depends on your personal and unique circumstances.