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How Does The Amazing Arizona Tax Credit Work?

by | Jan 19, 2022 | Blog, Qualified Charitable Organization, Tax Credits

 

Arizona tax credit

 

When discussing about Arizona tax credit, we should also know why and how taxes work. The primary goal of taxes is to use the revenue in its operational expenditures. When taxes are implemented, the government applies key principles such as ability-to-pay and balanced benefits of the taxpayer with the government. The government has to keep improving its services on safe highways, building schools roads, collecting garbage, upgrading your community, and have essential plans in achieving the needs of the state and the community. The government uses several types of taxes to gain the money it needs.

What are the types of taxes that the government is implementing?

The government takes its sources of revenue on several tax categories to support its expenditures in all its levels of governance, which are:

Personal Income Taxes

This tax type has a significant contribution in generating the government’s revenue. If you are a new employee or just got married or had a new baby, you need to fill up a W4 form called an employee’s withholding certificate. In this form, you must indicate your name, address, your civil status (single, married, or head of the family), and other information needed by your company to determine the correct amount to withhold from your paycheck.

You can submit this form W4 to your employer. The employer knows when the new W4 change you have filed will reflect your new withholding tax. A W2 form is a wage and tax report that the employer gives to the employee. The W2 record indicates the gross income, deductions, Medicare deductions, social security contributions, and other deductible contributions.

Property Taxes

Property taxes are imposed on the assets of an individual or a corporation, whether it is a business property or it is personal property.

Sales Taxes or Retail Tax

A sales or retail tax is imposed when bought at a retail outlet. It is a consumption tax. Some items like medicine, food, and basic consumables are exempted from this tax to help ease the burden of consumers.

Business or Vendor Taxes

These are taxes paid by business firms when engaging a type of business within the local community. It is a privilege and a legal aspect for the business entity.

Excise taxes. Excise taxes are imposed on items to discourage the consumers from its purchase. Liquor and cigarettes are examples of excise taxes, making them more expensive.

What are tax credits, and what are tax deductions?

An Arizona tax credit is a dollar-for-dollar tax reduction from your tax that you owe to the government. The taxpayer must know the difference between a tax deduction against an Arizona tax credit. In computing your taxes, a tax deduction is subtracted from your gross income to get the taxable income, while the Arizona tax credit is deducted from your tax. It means that a tax credit has more weight than a tax deduction.

Understanding Gross income, Adjusted Gross income, and Tax Deductions Terms

Anything that reduces your hard-earned gross income is a tax deduction. Some terms need clarifications that can confuse the taxpayer. Your gross income is the total income you gain from all your sources of earnings which is from your total income of jobs earnings, businesses, pensions, and others. Now the adjusted gross income will be your gross income minus expenses incurred. Refer to the IRS for guidelines on some costs that may be subtracted from the gross income to get your taxable income.

What are the Arizona tax credit requirements to be accepted for the prior year’s income tax filing?

Some of the requirements of a tax credit that should be followed includes:

  • Your donation should follow the guidelines and rules of qualified charitable organizations as specified on IRS, under IRC 503 ( c ) (3), or the policies of the State of Arizona.
  • For your donation to be credited, it should be received by April 15th for the prior year’s income tax filing.
  • The recipient of your donations should be received by qualified charitable organizations in Arizona or qualifying foster care charitable organizations (QFCOs) in Arizona. Take note that the eligible charitable organization should be certified by Arizona. Donating to qualified charitable organizations can give you a maximum $400 tax credit when filing individually and a maximum of $800 when filing jointly.
  • Donating to qualifying foster care charitable organizations can provide a maximum $500 tax credit when filing individually or a maximum of $1000 when filing your income tax jointly. A taxpayer can maximize the tax credit benefit by donating to qualified charitable organizations in Arizona and qualifying foster care charitable organizations.
  • All donations must be made in monetary funds. Material donations are not qualified to the tax credit system of Arizona.
  • A document copy of the donation receipt should be presented when filing your taxes as proof of your donation.
  • These tax credit donations can benefit individuals but cannot apply to corporations or partnerships.

What are the best charitable organizations which give a tax credit opportunity in Arizona?

 

Arizona tax credit

Many best charitable organizations in Arizona focus on community services committed to giving assistance to the less fortunate within the Arizona community. With this commitment, the government supports qualified charitable organizations in Arizona by tax credits. Some of the best charitable organizations that you can send donations to are as follows:

Children’s Care Arizona

This firm is one of the best charitable organizations that you can donate and receive a tax credit for your hard-earned income. This group protects you since it has a system of privacy policy, refund policy, and information secrecy policy. Your donation goes directly to the less fortunate low-income families and their children. The firm provides care to these children stricken by poverty under the care of this qualified charitable organization in Arizona.

GiveLocal KeepLocal Org

This firm is one of the best charitable organizations in Arizona, consisting of a group of organizations that joined together to promote Arizona charitable tax credit awareness. The group operates in southern Arizona, increasing awareness and donations to non-profit organizations in the region. It ensures that a high level of standards on fundraising is attained, which is better than that set by the association of fundraising professionals.

Aviva Children’s Services

This group is one of the best charitable organizations in Arizona, operating since 1978 in Pima County. It has partnered with Easterseals Blake Foundations in 2019, making the broader scope of services in the behavioral health center of excellence. It has served as a leader in infant and mental health and family preservation services. It has since served approximately 12,000 children and families in Southern Arizona.

With your donation, Aviva children’s services will continue with excellence as Arizona’s Qualifying foster care organization. Your donation to this qualified charitable organization in Arizona can be a one-time or recurring donation.

Arizona’s Children Association

Arizona’s Children Association is one of the best charitable organizations in the county, providing foster and care adoption services, behavioral health, and trauma care, handling family care and reunification programs, family education and support, offering models of therapeutics, and many more. It is considered as a QCO in the certified lists of the state.

Catholic Community Services of Southern Arizona

It is one of the leading and best Charitable organizations in Arizona. It was established in 1933 during the great depression when banks were on the verge of collapse, and tens of thousands of Americans left to search for jobs. From this call, the Catholic Community of Services was called for those in need in this troubling time. It has about 500 employees and has thousands of dedicated volunteers and donors supporting the CCS. It is a qualifying Charitable organization (QCO).

Children’s Clinics for Rehabilitative Services

This QCO is one of the best Charitable organizations providing comprehensive care for kids and teens. For 70 years, it has been providing health services in the onslaught of the polio epidemic. With your donations, the services will continue to care for and improve children’s lives with special health care needs.

United Cerebral Palsy of Southern Arizona

The United Cerebral Palsy of Arizona is one of the best charitable organizations. It is considered on the list as a QCO in Arizona. It is a non-profit organization providing home-based services for all disabilities, including elderly folks. This type of service will enable the patient to be visited and tended in their own homes.

Conclusion

Donating to these Qualified Charitable organizations can immediately impact those in need. It can be utilized as soon as possible and not wait for an allocated budget from the government that takes planning and time. It is indeed a two-way benefit for you and the recipient.