Monday, September 1, 2014

AZ Tax Credits - 2014 Updates

2014 AZ Tax Credits

Arizona tax planning allows for a great opportunity to direct your tax dollars to organizations that you choose to support directly by way of the AZ State Tax Credits.  A tax credit is more valuable than a tax deduction because a credit offsets tax liability dollar for dollar.  The below described credits are available to AZ residents and non-residents with a tax obligation to the state of AZ.  These credits are non-refundable meaning that you can not create a refund solely by donating to these organizations, but you may create an overpayment of taxes paid by making these tax credit contributions.  Some of the unused contribution credits are eligible to roll forward/carryover for use in future years (5 year carryover). For example, a taxpayer who makes $1,800 of eligible contributions but has only a $400 liability will reduce their liability to $0 (zero) and have $1,200 available for future years. To see if this may be beneficial, you should review your State of Arizona liability for the last year. You will find your 2013 State of Arizona tax liability on Form 140 Line 23. If you have any questions, please contact the office. 

Working Poor Tax Credit - $200/$400 Single/Married

List of Qualifying Organizations -

The Working Poor Credit contributions are reserved for charitable organizations that spend at least 50% of their budget on services to Arizona residents who received Temporary Assistance for Needy Families (TANF), households living below a certain income level, or households containing chronically ill or physically disabled children.
I have a personal preference recommendation as I am involved with Helping Hands for Single Moms (a qualified organization) and Becky Gaylor is involved with ShoeBox Ministry (also qualified).  If you can support these organizations, that would be greatly appreciated.

Qualifying Foster Care Charitable Tax Credit - $200/$400 Single/Married
List of Qualifying Organizations

This is a newer tax credit available for donations to Qualifying Foster Care Charitable organizations.  The credit is allowed up to $200 for single taxpayers and $400 for married taxpayers.

School Tuition Organization - $525/$2,106 Single/Married

Qualifying Organizations -

The STO credit is now indexed for inflation and there are 2 components to the credit, a tax credit available for kids switching to a private school from public school and scholarships for kids already attending private school.  The contribution can be made up to the April 15 tax deadline and qualify for the prior year as a credit (similar to an IRA contribution).

For single taxpayers, the 2 credit amounts total $1,053 that can be contributed, the total for married taxpayers is $2,106. You have to inform the school tuition organization of the year the credit is being claimed and if you have made any other contributions.

This credit generally raises the most controversy due to the amount allowed and due to this credit supporting private school education versus the public school system.  I merely am trying to inform of the credit being available and not promoting the merit of the credits.

Credit for Contributions Made or Fees Paid to a Public School - $200/$400 Single/Married

Eligible Organization: Any Arizona public or charter school

Credit contribution amounts benefit the school's general activity fund or designated extracurricular programs such as music, sports, arts, and civic activities. This is a great opportunity for individuals to provide funding for programs they are passionate about or participated in during their school careers. This is also a chance to support an under-served school that might not otherwise get funding.

This credit needs to be paid on or before December 31st to be eligible to be claimed on the current year tax return.

Arizona Military Family Relief Fund - $200/$400 Single/Married 
Arizona Department of Veterans Services This link will  provide access to the form needed to remit your donation.

Contributions to this fund assist military families during the loss of a loved one, unforeseen financial hardships, or rehabilitation stints. This fund, an incredibly worthy cause, is capped at $1 million dollars of contributions annually. I urge you to CONTRIBUTE AS SOON AS POSSIBLE.

In prior years the Department of Veteran Services would provide an update as to the contributions received.  The website has been updated and I am unable to locate the current donations made year to date.  If the fund has reached the donation cap, the excess donations are returned and no credit is available.  Again I urge making this contribution as early as you can to avoid missing the cut off.

The above list is a listing of the available charitable tax credits, there are other types of AZ tax credits available.  The above contributions may also qualify for charitable donation deductions on Federal (IRS) tax returns but the credits are applicable to AZ tax only.

If you have any questions about how the tax credits are applicable to your tax return, please contact the office.

Best Regards and Many Happy Returns,