On Thursday, August 23, 2018, the IRS issued proposed regulations that would disallow the federal deduction for donations made to charitable organizations in which taxpayers receive a tax credit.Â The proposed regulation was needed to halt the many states that were putting in place credit programs to circumvent the recent tax law change limiting the deduction for state and local taxes to $10,000.
The proposed regulation impacts donations made after August 27, 2018.Â The regulation is not final and a comment period is required; however, to secure your Arizona state tax credits for 2018, we are recommending you make your contributions before August 28, 2018. Any donation made on or after August 28, 2018 will still be an Arizona state credit but potentially will be disallowed as a charitable donation for federal tax purposes.
As a reminder, Arizona has five tax credit programs. We have listed the credits, a link to the AZDOR website for a list of qualifying charities and the maximum amounts for 2018 below:
- Qualifying charitable organization- $400 limit for Single, Head of Household (HOH) and Married Filing Separate (MFS) taxpayers. Limit is $800 for Married Filing Joint (MFJ). Click here forÂ details on charities that qualify for this donation.
- Private School Tuition organization- $1,107 Single, HOH and MFS limitation.Â The limit is $2,213 for MFJ. Click here for details on STOs that qualify for this donation.
- Public School contributions- $200 Single, HOH and MFS limitation.Â The limit is $400 for MFJ. Click here for a list of schools that qualify.
- Military Relief- $200 Single, HOH and MFS.Â The limitation is $400 for MFJ. Note: this credit has a $1M cap. Click here for details on how to make this contribution.
- Qualifying Foster Care- $500 Single, HOH and MFS limitation.Â The limit is $1,000 for MFJ. Click hereÂ for a list of charities that qualify.