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The Top Things You Need to Know about Arizona Tax Credit School Donations

by | Aug 13, 2020 | Tax Credits, Blog

As taxpayers, one way or another, we wonder where our taxes go to or if our hard-earned money is, indeed, used correctly. Fortunately, you can use the amazing Arizona tax credit program, allowing you to help through school donations. 

An Arizona tax credit, also known as a tax incentive, allows individual or corporate taxpayers to subtract the same amount of the said credit from their total tax liability to the state. This program enables a dollar-for-dollar reduction, which you can process through a qualified charitable organization, a registered participating school, or qualified military institution.

Hence, you’ll know for sure where that government funds (in the form of tax) go because you get to personally hand it to an organization or advocacy of your choice. You invest in a renewable energy source like solar panels; then, you could get a tax credit. You participate in a charitable event; then, you could get a tax credit. You help a child afford education; then, you could get a text credit. Arizona State has done a great job in creating and enforcing such legislation that helps its people from the bottom tier while putting its people from the top level at ease.

 

tax credit

 

Let us dig deeper into the school donations tax credit program.

Public School Tax Credit

You can donate directly to a public or charter school of your choice, and you can get a dollar-for-dollar credit on your taxes. 

The funds you donate will only be used for standardized testing and fees, career and technical education assessment (CPR training), character education, and extracurricular activities.

When you opt to donate to a public school, you’ll be utilizing the Tax Form 322, where you will be required to include the school’s district code and site number (CTDS). While there is no set minimum amount, you can avail tax credit for up to $200 and $400 for a single and married couple filing jointly, respectively. 

Private School Tax Credit

Non-profit school-tuition organizations (STO) handle donations to private schools. Hence, should you wish to donate to students attending private schools, you may coordinate with STOs. In the same way, you can get a dollar-for-dollar credit on your taxes.

While the state prohibits giving money or scholarship to a specific child, STOs can recommend eligible students, which they usually base on the student’s family income.

The Department of Revenue provides a list of qualified STOs, and you have four options for private STO donation.

Original Individual Arizona Tax Credit

The funds or the scholarships under this category go to any K-12 students or preschool students with disabilities.

Switcher Individual Arizona Tax Credit 

Under this category, the funds or scholarships are provided to K-12 students transferring from a public to a private school. 

Corporate Tax Credit

Funds and scholarships under this category will be given to low-income students.  These students belong to a family of four earning less than $85,905. 

Disabled/Displaced Corporate Credit

For this category, students with disabilities benefit from the funds and scholarships. These are children who are or were in foster care. 

 

Takeaway Thought

Arizona offers an amazing chance for you to use your tax liabilities to help people in need. Besides donating them to a qualified charitable organization like Children’s Care Arizona, you can also donate your Arizona tax credit to registered participating schools or through coordinating your contribution to qualified corporations.