Keeping Tax Donations in Your Community

In August 2016, five organizations united in a collected effort to educate and inform individuals on how they could redirect their Arizona tax dollars to make a difference in their local communities. Greater Prescott Area Tax Credit Coalition now has 17 organizations and continues to educate the community on practicing informed decision-making and having greater control over how their tax dollars are spent. Their mission is simple: to keep charitable donation monies local to support and strengthen essential social services needed by the greater Prescott area.
The coalition is diverse in its members, who represent various missions that capture multi-faceted needs of our local community. Members include Arizona Children’s Association, Boys & Girls Club of Central Arizona, Boys to Men Mentoring, Catholic Charities Community Services, Expeditionary Learning Academy, Hozhoni Foundation, The Launch Pad Teen Center, Northland Cares, Northpoint, Prescott Farmers Market, Prescott Free Clinic, Prescott Habitat for Humanity, Prescott Meals on Wheels, Prescott Unified School District, U.S. Vets, West Yavapai Guidance Clinic, Yavapai Casa for Kids Foundation, Schutte & Hilgendorf PLLC-CPAs and Arizona Community Foundation of Yavapai County.
The coalition focuses on education around tax credits – the amount of money a taxpayer is able to subtract against a tax liability that is owed to the state. Tax credits are designed to encourage or reward certain types of behavior that are considered beneficial to the economy, environment, or to further any other purpose the government deems important. Tax credits generally save taxpayers more money than deductions, as deductions only reduce the amount of your income that is subject to tax, whereas credits directly reduce your tax bill. A tax credit is a dollar-for-dollar reduction of the income tax you owe.
For example, if you owe $1,000 in Arizona taxes, but are eligible for an $800 tax credit, your net liability drops to $200. Tax liability can be dispersed into several categories to include qualifying charitable organizations, qualifying foster-care charitable organizations, public schools (includes public charters) and private school tuition organizations. Tax credit limits are not for the total year, but rather for each specific type of category. It’s possible to receive a $1,800 total credit by donating the maximum amount to each of the aforementioned categories. Contributions that exceed one’s tax liability can be “rolled over” into subsequent years and applied to future tax liability. Visit prescottareataxcredit.com/ for more information.
Check with your tax advisor to verify qualification.