Arizona taxpayers now have five different state tax credit options that allow taxpayer’s charitable contributions to qualify for a dollar-for-dollar reduction of their Arizona income tax liability. These donations also qualify for a federal charitable deduction. What’s more, taxpayers can direct each of their tax credits to a specific charitable organization.
Arizona’s 2016 legislative session saw a change to a number of Arizona’s tax credits with some increasing or separating from other credits. A current list of the available credits are:
- Qualifying Charitable Organization (QCO) Tax Credit, which doubles the allowable amount of what formerly was known as the Charitable Tax Credit. Starting with the 2016 tax year, the new QCO single or head-of- household credit is up to $400; for those filing jointly, it is up to $800. Like its predecessor, the QCO supports organizations providing assistance to Arizona residents who are low income, chronically ill or have physically disabled children.
- The Qualifying Foster Care Organizations (QFCO) Tax Credit, which also is new, is similar to the QCO but is intended for foster-care community services. Starting with the 2016 tax year, the new QFCO single or head-of-household credit is up to $500; for joint filers, it is up to $1,000.
- The Public/Charter School Tax Credit supports extracurricular activities that require students to pay a fee in order to participate. Taxpayers are not required to have children to take the credit, which is $200 for single or head-of-household, and $400 for joint filers.
- The Private School Tuition Credit provides scholarship money to students attending private schools, and taxpayers without children may take the credit. It is a maximum of $1,087 for single or head of household, and $2,173 for joint filers. Please note: to claim one of the above credits on your 2016 Arizona tax return, contributions must be made by April 15, 2017.
- The Arizona Military Family Relief Fund (MFRF) is administered by the Arizona Department of Veterans’ Services and helps families of injured or killed service members with special expenses. Certain cash contributions to the fund qualify for a credit. The fund has an annual cap of $1-millon for refundable Arizona tax credits. Single or head-of-household taxpayers can take up to a $200 tax credit; joint filers, up to $400. Please consult your tax advisor when making these contributions to see if the annual cap has been met. Funding for this contribution is due by December 31, 2016.
Details on the MFRF are available at dvs.az.gov/mfrf. Details about the four other tax credits are at https://azdor.gov/TaxCredits.aspx.
To learn how REDW can assist you in maximizing tax credit opportunities, or addressing other personal or corporate tax matters, please contact Christina Roderick.
