by Kristen Kerns, Prescott Valley & Chino Valley Unit Director, Greater Prescott Area Tax Credit Coalition Founder
What is a tax credit? Tax credits are designed to encourage or reward certain types of behaviors that are considered beneficial to the economy and the environment or to further any purpose the government deems important. Arizona state tax credits offer a dollar-for-dollar credit on your state taxes.
What is the difference between a tax credit and tax deduction? Tax credits generally save you more money than deductions. Tax deductions only reduce the amount of your income that is subject to tax, whereas credits directly reduce your tax bill.
Who can you donate to, and how much can you donate? Each type of organization or school has a different donation amount, and the amount depends on if you file your taxes as a single person or as married/filing jointly.
- Qualifying charitable organization: $400 single/$800 married/filing jointly
- Qualifying foster care charitable organizations: $500 single/$1,000 married/jointly
- Public and charter schools: $200 single/$400 married/jointly
- Private school tuition organizations: $545 single/$1,090 married/filing jointly AND $542 single/$1,083 married/jointly
Can I donate to more than one type of organization? Absolutely! If you have enough tax liability you can donate to one, two or all types of organizations. For example, if you owe $2,200 in Arizona state taxes and you file your taxes as a married couple, you can donate to a qualified charitable organization, a qualified foster care charitable organization AND a public or charter school. You don’t always have to give the max amount. If you owe $1,000 in Arizona state taxes and want to donate to multiple qualified charitable organizations, a foster care organization and two public schools, you can! The options are almost endless as long as you owe that much in tax liability and do not exceed the amounts listed above.
When is the deadline to donate? In 2016, thanks to Gov. Doug Ducey, the deadline was extended to April. As long as you make your donation to a school, qualified charitable organization and/or foster care organizations by April 17 you will see a dollar-for-dollar credit on your Arizona state taxes.
Where can I get more information? For more information visit the Greater Prescott Area Tax Credit Coalition’s website at prescottareataxcredit.com.
This summary was prepared as an informational service and is not intended as legal or tax advice. Consult your own legal or tax advisor before making any decision based on this information.