Arizona Charitable and Public & Charter School Tax Credits
There are various tax credits offered through the State of Arizona that support local nonprofits and (summarily) redirect what would be your Arizona tax dollars to these nonprofits. This article addresses the tax credits available to individual tax return filers, with dollar limits that vary based on your filing status. The first four (4) credits are non-refundable and provide a dollar-for-dollar credit toward your Arizona income tax liability. If your total tax credit contributions exceed your tax liability, the unused portion can be carried forward for up to five (5) years. Please keep copies of your receipts for your tax records and provide them to us. You can use any or all of these credits to reduce your taxes in any given year.
Please be sure to consult the AZDOR lists of eligible organizations each year before giving to organizations for current-year tax credit donations. The lists change each year, and organizations may no longer be listed as eligible for tax credits in the current year. You can access the list of Qualifying Charitable Organizations (QCO) here. You can access the list of Qualifying Foster Care Charitable Organizations (QFCO) here.
Contributions to QCOs and QFCOs (2023)
Arizona provides two separate tax credits for individuals who make contributions to charitable organizations:
one for donations to Qualifying Charitable Organizations (QCO) The maximum credit allowed is $841 for married filing joint filers and $421 for single, heads of household, and married filing separate filers
and the second for donations to Qualifying Foster Care Charitable Organizations (QFCO). The maximum credit allowed is $1,051 for married filing joint filers and $526 for single, heads of household, and married filing separate filers.
Individuals making cash donations made to these charities may claim these tax credits on their Arizona Personal Income Tax returns.
Starting 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.
Starting 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 tax credits for contributions QCOs or QFCOs. The department’s lists of qualifying charities include the code assigned to each organization.
Public & Charter School Tax Credit (2023)
An individual may claim a nonrefundable tax credit for making contributions or paying fees directly to a public school in this state for support of eligible activities, programs or purposes as defined by statute. The public school tax credit is claimed by the individual taxpayer on Form 322. 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.
Credits for Contributions to Certified School Tuition Organizations
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)
This tax credit is claimed on Form 323. For tax year 2023, the maximum credit allowed is $1,308 for married filing joint filers, and $655 for single, heads of household and married filing separate filers. The list of approved tuition organizations can be found here.
Credit for Contributions to Certified School Tuition Organizations (Switcher Individual Income Tax Credit)
This tax credit is claimed on Form 348 and is available to individual taxpayers who donate the maximum amount allowed under the Credit for Contributions to Private School Tuition Organizations (Form 323) and make an additional donation to a Certified School Tuition Organization. For tax year 2023, the maximum credit allowed is $1,301 for married filing joint filers, and $652 for single, heads of household and married filing separate filers.
Credit for Business Contributions by an S Corporation to School Tuition Organizations
This tax credit is claimed on Form 335-I 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 claimed on Form 341-I is available for individual shareholders to claim their pro rata amount of contributions made by an S corporation to a Certified School Tuition Organization.
If you have any questions as to how to utilize these credits, please contact us prior to making the contributions.
Tudor Financial Group, LLC (602) 992-3300
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