In most countries, taxation is the most crucial financial structure. The government imposes this on individuals and businesses to allocate this for economic development. In Arizona, people can offset their taxes by giving to their chosen qualified charitable organization. This gesture is commonly known as tax credits. Let’s go deeper into this discussion about Arizona Tax Credit as we go along.
Arizona Tax Credit
The state of Arizona optimizes charity and tax benefits by implementing tax credit, wherein they incentivize people who extend their help to support charities. The government believes that the public can do more in helping the most vulnerable societies than their own initiatives.
For taxpayers to avail an Arizona tax credit for donation, they need to choose which qualified charitable organization they want to help. In Arizona, they can select between two types of tax donations: Qualifying Charitable Organizations and Qualifying Foster Care Charitable Organizations. Both kinds of donations support various organizations with different causes. We created a list of charities you can choose from.
Notably, the government regulates tax benefits for donations to avoid abuse from the taxpayers. Depending on your chosen qualified charitable organization and civil status, there’s a specific required amount for you to be eligible for the Arizona tax credit.
With today’s advancement, most charities have websites for donors to visit to explore their advocacies. If you are looking for one, at Children’s Care Arizona, we nurture the well-fare of the kids. We believe that a great future lies in their hands. To learn more about our advocacies, you can call 480 795 3775.
How to Report Contributions for An Arizona Tax Credit?
The government implemented Arizona tax credits for the sole purpose of encouraging people to those who are in need. Receiving tax benefits is only secondary. Maybe most of you wonder how to report your contributions to a qualified charitable organization. So, we hear you; the following are ways how to get your tax credits after donating:
1. Retain a copy of your receipt of donation
Remember to document the necessary donations you have provided to the qualified charity organization. And as a donor, it is your right to ask for a donation receipt. If you have additional concerns regarding documentation, do not hesitate to ask for advice from the most trusted tax professional.
2. Accomplish a form corresponding to receiving tax benefit donations.
Fulfill a form corresponding to the type of donation you made. For Qualifying Charitable Organizations, you should fill up Arizona Form 321. On the other hand, you should complete Form 352 if you donated to nonprofits under Qualifying Foster Care Charitable Organizations.
3. Determine your income tax return.
Fulfill the appropriate form to identify your income tax return. Keep in mind not to forget to include the necessary codes like for Qualified Charitable Organization; it is 20487. It is essential to know what type of code you need for your chosen qualified charitable organization. When filing, you can always consult your tax professional.
More About Arizona Tax Credit
There are more things you need to understand about Arizona Tax Credit. These are important things to note when you plan to avail tax benefits for donations.
As mentioned earlier, the government regulated tax benefits, and wherein there’s a maximum donation to be eligible for the tax benefits. Based on the Arizona Department of Revenue’s blog, individuals selected to support groups under Qualifying Charitable Organizations have a maximum donation of $800 for married filing joint filers and $400 for single, heads of household, and married filing separate filers.
For those wishing to help the qualified charitable organization under QFCO, you have a maximum credit of $1,000 for married filing joint filers and $500 for single, heads of household, and married filing separate filers.
When filing for tax credits and tax liability, it is important to be wary of the deadlines. Interestingly, compared to other countries, Arizona taxpayers are not required to donate for tax credits before December 31. They can donate to their chosen qualified charitable organization up to April 15.
Be Keen in Documenting Charitable Contributions
In order to claim an Arizona tax credit, the state and the IRS require documentation for charitable contributions. Here are some guides from the IRS:
- Donors must have a copy of their bank record or written communication from a charity for any monetary contribution before the donors can claim a charitable donation on their federal income tax returns.
- Donors are responsible for obtaining a written acknowledgment from a qualified charitable organization for any single contribution of $250 or more before the donors can claim a charitable contribution on their federal income tax returns.
- The acknowledgment must contain goods or services you provide to your qualified charitable organization in exchange for a contribution of $250 or more. It must also provide a good faith estimate of the value of the goods or services because a donor must generally reduce the amount of the tax credit deduction by the fair market value of the goods and services provided by the organization.
Payroll Withholding for Charitable Giving
The IRS allows taxpayers to receive tax credit donations through payroll withholding. Remember to use a pledge card prepared by, or, at, the direction of the charitable organization, along with one of the following documents:
- Form W-2, Wage and Tax Statement, or
- other employer-furnished documents that show the amount withheld and paid to a qualified charitable organization
It is fascinating how efficiently the government of Arizona optimizes charity and Arizona tax credit. There are plenty of incentives you can get when you support charities in Arizona. You have the opportunity to choose which non-for-profit groups you are willing to help. Most qualified groups under QCO and QFCO promote the advocacy of supporting the needs of the most vulnerable individuals in the societies like foster children, the homeless, persons with disabilities, and elders.
Helping others with your resources to make their lives more livable is more fulfilling, aside from the interest of getting tax credits for donations. If you are looking for a qualified charitable organization, you can consider helping Children’s Care Arizona. We provide educational support to children who belong to low-income families. To know more about us and Arizona tax credit, you can contact 480 795 3775.