Useful Arizona Tax Credits

As you get ready for this year’s tax preparation here is a reminder about three useful Arizona tax credits you maybe able to claim on your Arizona state income tax return. If you have any of the transactions discussed below collect the supporting documentation together and give it to your tax preparer so they can check if you qualify for the credits.

In summary the three types of transactions are:-

• Cash donations to certain charities
• Fees or contributions paid for certain school activities
• Contributions paid to certain private school tuition organizations

A long winded title, but in essence this gives a credit for cash donations to certain charities. The benefit of this credit is that it gives you a dollar for dollar reduction in your Arizona tax whereas claiming the donation on Schedule A as an itemized deduction only saves you tax at your marginal tax rate.

The amount and qualifying conditions are:-

• You must claim itemized deductions on Schedule A – if you take the standard deduction you cannot claim the credit.
• The credit is worth up to $200 for single and head of household filers, and $400 for married filing joint filers.
• If the credit is more than your Arizona tax you can carry forward the surplus for up to 5 years.
• The donations must be in cash.
• Only certain charities qualify. To see if the charity you gave the donation to qualifies, visit the AZDOR Working Poor Tax Credit page.

This is a credit available if you pay for certain school activities for your children. The credit gives you a dollar for dollar reduction in your Arizona tax which is a very beneficial way of getting tax relief for the payments. To claim the credit you will need to get a receipt from the school which will show the required information for the claim.

The amount and qualifying conditions are:-

• You must make contributions or pay fees for extra curricular activities or for character education programs. Examples would be band uniforms, equipment for sports events, scientific equipment or trips for competitive events.
• The payments must be to a public or charter school in Arizona providing education up to grade 12.
• The credit is worth up to $200 for single and head of household filers, and $400 for married filing joint filers.
• If the credit is more than your Arizona tax you can carry forward the surplus for up to 5 years.

This is a credit available if you make contributions to a private school tuition organization that provides scholarships or grants to qualified schools. The credit gives you a dollar for dollar reduction in your Arizona tax which is a very beneficial way of getting tax relief for the payments. To claim the credit you will need to get a receipt from the tuition organization which will show the required information for the claim.

The amount and qualifying conditions are:-

• You must make contributions to a qualifying organization. To see a list of organizations that qualify see the list maintained by AZDOR.
• As a condition of making the contribution you must not designate it for the direct benefit of your own child or any other named student.
• The credit is worth up to $503 (was $500) for single and head of household filers, and $1,006 (was $1,000) for married filing joint filers.
• If the credit is more than your Arizona tax you can carry forward the surplus for up to 5 years.

Note that you can also claim for contributions you make in the period January 1 to April 15 after the end of the tax year.

These credits are worth claiming so if you have the documentation make sure that your tax preparer does not miss out on the claims.

Once you are ready to prepare your federal and Arizona income tax returns call us on (480) 363-4808 to book an appointment. If you live in Chandler, Tempe, Mesa, Gilbert or Queen Creek, AZ we will come to you to prepare your income tax return. If you live elsewhere we can prepare the tax return using information you upload to our secure client portal or mail to us. We look forward to helping you prepare your income tax returns and maximize your Arizona tax credits.

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.

Posted By Mark Smith

Mark Smith, EA is an Enrolled Agent and accountant with over 30 years tax and accounting experience. He is the owner of Cranmere Accounting and Tax Services LLC. He can be contacted on (480) 363-4808 or by email at info@cranmereaccountingandtax.com if you need assistance with any of the above.

• 
•