You can have no state taxes owed and use your AZ tax credit. The majority of people have a portion of their pay withheld to cover state taxes. After deducting and crediting, the amount paid frequently exceeds the amount owed, resulting in a tax refund. Also, a minimum income criterion prevents everyone from filing annually. If you make less than that amount, you are not required to file taxes. However, you may wish to do so to collect withheld refunds or refundable credits received from paying tax credits such as to a qualified charitable organization.
A refundable AZ tax credit can help you get a tax refund.
A qualified charitable organization, for example, can provide you with tax credits if you want charity and tax benefits at the same time. When you donate, you can get both refundable and non-refundable tax credits. If you ever qualify for one and the amount of the AZ tax credit exceeds the amount of tax you owe, you will receive a refund for the difference. For example, if you owe $800 in taxes and qualify for a $1,000 refundable credit, you will receive a $200 refund.
Some taxpayers may discover that they owe no taxes due to non-refundable credits, deductions from any Qualified Charitable Organization, Student Tuition Organization, or other circumstances. Although if you don’t owe any taxes, you can apply for any refundable credits that you qualify for and get a refund for how much money you get back from your AZ tax credit. For example, if you owe no taxes and are eligible for a $2,000 refundable tax credit, you will receive the entire $2,000 as a refund.
Things to Keep in Mind
As a result, after accounting for all non-refundable credits, deductions, and tax payments, consider calculating any refundable tax credits. Tax refunds are more manageable when you donate to any Qualified Charitable Organization or Student Tuition Organization. However, there are still things to keep in mind when using your AZ tax credit.
Credits availability changes on a year-to-year basis
Although charity and tax benefits are very advantageous, keep in mind its availability since it’s unguaranteed that a tax credit will be available every year. Every year, Congress has the option of extending many of the tax breaks that were available the previous year. Some credits created as part of a stimulus help the economy and expire after several years. If Congress does not choose to extend credit, the AZ tax credit will expire.
For example, the Making Work Pay Credit provided a refundable credit of $400 for individuals and $800 for married couples filing jointly. It was available in 2009 and 2010, but it is no longer available because Congress did not extend it. Thus, make sure that you check your tax credits’ availability yearly. You can also contact the Qualified Charitable Organization or Student Tuition Organization you’ve given your contribution for this.
Rules are changeable by Congress.
When deciding whether to extend or allow an AZ tax credit to expire, the federal government may compromise by changing the credit terms, making it worth more or less than in previous years. For example, the First-Time Homebuyer Credit, established in 2008, was initially worth up to $7,500, with the taxpayer required to repay a portion of it each year. Instead of the First-Time Homebuyer Credit expiration in 2008, it was extended and amended for homes purchased in 2009 and 2010. The modified credit was worth $8,000 maximum, and no repaid was required unless the homebuyer sold or moved out. The federal government can also change the credit terms. For example, the credit becomes non-refundable from refundable, or the qualifications for the credit could change, affecting the number of people who can benefit from it.
As of 2019, Arizona filers can deduct 25% of their total charitable donations from the approved Qualified Charitable Organization list for the year on their state tax returns regardless of whether you take the standard deduction or itemize on your federal tax returns. Always inquire to a Qualified Charitable Organization about the charity and tax benefits they provide.
Unclaimed Tax Refunds
There are two types of people who earn unclaimed tax refunds: those who don’t know what or how to process tax refunds and those who donate to any Qualified Charitable Organization for the joy of it, regardless of the AZ tax credit program you are in. As a result, the IRS reports that unclaimed tax refunds are piling up. If you haven’t claimed your refund yet, don’t worry; unclaimed tax refunds are claimable if filed within three years of the due date. If you have had your return approved for less than a year, you can request a reissue through the IRS’s unclaimed refund database. You must enter your SSN, filing status, and return amount for your security. You can also make changes to your information on their website. Until you file a new tax return, the IRS website will keep track of your refund. If you want to request a refund within a year of the statute of limitations expiring, you have two options. Fill out Form 3911, Taxpayer Statement Regarding Refund, if you filed jointly. Please call 1-800-829-1954 if you use a different status. Furthermore, you will not be penalized for filing late if you file an earlier year return to receive a refund.
Arizona Tax Year 2019 Deadline Reminders
The Arizona Department of Revenue (ADOR) reminds Arizona taxpayers that the April 15 deadline for filing and paying individual, corporate, and fiduciary 2019 calendar year tax returns has been pushed back to July 15 due to COVID-19. Because of the new deadline, taxpayers who file state tax returns or make payments by July 15 will not be penalized or charged interest for late filing or late payment. The 2019 AZ Tax Credit Contribution Deadline, on the other hand, remains April 15. The deadline for taxpayers who want to claim their AZ tax credit for donations to any Qualified Charitable Organization certified School Tuition Organizations (STOs) and public schools on their 2019 individual income taxes is April 15.
Children’s Care Arizona is a nonprofit Qualified Charitable Organization that provides you receipts for your tax filing, making the AZ tax credit process easier. Check out their website at https://childrenscareaz.org/ for more information.