Sandwiched between Thanksgiving and New Years Day are weeks of parties, presents and family time. This is also the time of year when schools and charities ask for donations that are not merely tax deductible, but qualify you and your fellow jolly Arizona taxpayers for tax credits. Schools and charities ramp up their campaigns for donations now because they need to be made by Dec. 31, 2013 for you to get the tax credit.
Unlike deductions that lower your taxable income, and thereby the amount of tax you owe, tax credits allow you to lower your tax bill by the amount donated up to specific limits for singe and married taxpayers. If you have to pay taxes anyway, you can donate to a public school, certain charitable organizations or to help pay tuition at a private school rather than including that amount in what you owe the Arizona Department of Revenue. Sorry, this is not a federal program. You still owe the IRS its share of your income.
Tax Credit for donating to Public Schools and Private School Tuition Organizations
The tax credit for public schools is for fees paid for extra-curricular activities or character education. For single heads of household the maximum credit is $200. For married couples filing jointly the maximum is $400.
There is a credit for contributions to Private School Tuition Organizations, allowing single taxpayers to claim $517 and married couple to claim $1,034. Taxpayers can claim an additional tax credit if they donate to a Certified School Tuition Organization after donating the maximum to a Private School Tuition Organization.
This being a tax issue and all, there are stipulations, limits, qualifiers and all manner of rules and regulations determining who may claim the credit, how much they can claim and to whom the donation can be made. Read more about School Tax Credits for individuals and as always, consult your tax professional or the Arizona Department of Revenue for all the gory details.
Tax credit for donating to charitable organizations
Still with me? There’s another tax credit available to Arizona taxpayers with its own set of gory details and parameters. It’s a tax credit for donating to Qualifying Charitable Organizations.
Not just any ol’ charitable organization like your neighbor’s Society to Promote the Welfare of Cuddly Wildlife. Nope, the organizations must “provide assistance to residents of Arizona who either receive Temporary Assistance of Needy Families (TANF) benefits, are low-income residents of Arizona, or are chronically ill or physically disabled children. In addition, a Qualifying Charitable Organization may be considered a Qualifying Foster Care Charitable Organization if it meets additional criteria in serving foster children.”
That’s according to the Arizona Department of Revenue website. I could not make this stuff up. Read all about the Qualifying Charitable Organizations to make sure you understand the rules. Check out these awesome FAQs regarding tax credits and Qualifying Charitable Organizations. OK, they aren’t awesome, but I bet someone I could use the word awesome when writing about tax credits.
What if you don’t owe any taxes this year? Can you still donate to schools, charities and the needy? Of course you can, and they’ll be glad you did.