How to Make the Most of your Arizona Tax Credit

If you could donate money to a cause close to your heart at NO cost to you, why wouldn’t you?

Did you know that Arizona law allows taxpayers to receive a dollar-for-dollar Arizona tax credit for contributions made to charities, foster kids, and students?

Your contribution can help provide backpacks and camp to foster kids, provide robotics courses, field trips and more to students. Or, you could help a specific student thrive in a smaller private school environment where public school may not provide the social and emotional support they need.

The possibilities are endless and the need is limitless.

Although Arizona is the most generous of state programs, other states offer similar tax credits, so check with your accountant for specific opportunities in your state.

There is still time to use your Arizona 2023 Tax Credit!

“I LOVE paying taxes.”

Said no one, ever.

“But Arizona has made taxes cool!” – Yes, I said that….

If you have a job and live in the state of Arizona, you most likely owe state income taxes.

Arizonans have an amazing opportunity to allocate tax dollars through the AZ Tax Credit program to satisfy this obligation.

As an Arizona taxpayer, this means you can support your favorite charitable organizations with tax credit donations at NO cost to you. Make your donation, then receive a tax credit in the same amount! In essence, you get to direct your tax liability to a place of your location of your choice, vs a general fund.

The organization you select will receive 100% of the contribution.

You then claim this as a “tax credit donation” when you file your Arizona income tax return.

What makes the Arizona Tax Credit so amazing?

When you are required to do something like pay taxes, everyone values accountability, transparency, and impact!

This is an opportunity to direct the dollars you are already required to pay the state of Arizona and YOU determine how this money is to be allocated.

There are four categories that Arizonans can support through donations AND receive a dollar-for-dollar tax credit. Donations amounts are for married filing jointly. You need to have a tax liability to absorb the amount.

Qualified Charitable Organization (Up to $841)
Qualified Foster Care Organization (Up to $1,051)
Private School Tuition Organizations (Up to $2,609)
Public Schools (Up to $400)

Your contribution helps charities and schools provide a range of much needed services.

You can learn more about contribution program limits at AZ Tax Credit program.

How does the Arizona Tax Credit Program work?

In five simple steps, you can help out your community, at no cost to you, other than a few minutes of your time.

Step 1: Determine your AZ tax liability for the year with your accountant (you need to have a liability at least equal to the amount of the tax credit you will be giving)
Step 2: Determine how much you are eligible to donate from the four categories above
Step 3: Make your contributions to the organizations through each of their websites (or personal link in the case of specific student sponsorship).
Step 4: Claim your tax credit on your AZ income tax return
Step 5: Enjoy the dollar-for-dollar tax benefit!!

Is there a Cost to me?

NO! There is NO NET COST to the taxpayer!

This is a dollar-for-dollar tax credit!

If you owe taxes, then your tax obligation will be reduced by the amount you donated.
If you are expecting a refund, you will get your refund PLUS whatever you donated (assuming you have a tax liability and owe the state before taking into account any withholding)

And BONUS… if you make a credit card contribution online, chances are that this is probably helping you rack up some airline miles or hotel points. And likely not paying a surcharge because its a charity.

(Note: Per Kathleen’s Live Richly tips, pay your credit card balance off each month.)

The Impact is Real – How the Arizona Tax Credit Program Positively Impacts Communities

Since learning about the AZ Tax Credit program, our family has taken advantage of it for YEARS and we plan to maximize contributions to all four categories for 2023 — you have until April 15, 2024 to make your tax credit donations for 2023!

Reflecting on our family’s personal experience….

For the private school tax credit, you have the opportunity to “recommend” a specific student to receive your tax credit donation as a scholarship.

We have been recommending the same student for several years now. It gives us joy knowing our tax credit dollars off-set his private school tuition expenses. This young man is thriving academically and personally at the school that is right for him, and we are proud to support his educational journey.
– Maria ALDRICH

And we are now getting to know a new charity this year…

In 2023, we were introduced to a non-profit that trains service dogs for families with special needs by our friends who are recent recipients. In observing their experience, we have developed a deep appreciation for this organization and the extensive training the dogs receive.

“We are excited about the impact this dog will have on the family and want our tax credit dollars to make this opportunity available to other families who may benefit from a service dog.”
ALDRICH FAMILY

A little extra administrative work = Real Impact

You are likely thinking this is all too good to be true. But I assure you it is true AND it makes a difference.

If you are filing an AZ income tax return this year, I urge you to contribute the maximum to all four categories. There is reason NOT to participate in this program, since you have to pay the taxes anyway.

And if you need a student to “recommend” for the private school tax credit, ask me for an idea — I know plenty of students attending private school right now who could use a hand.

Bottom line: Value the transparency and the opportunity you have to make a positive impact in your community.

Help others LIVE RICHLY. FIND HAPPY.

The information provided herein is not written or intended as tax or legal advice. Entities or persons distributing this information are not authorized to give tax or legal advice, and you are encouraged to seek specific advice from your personal tax or legal counsel.