Wednesday, June 1, 2016

Updates to Arizona Charitable Tax Credits


The Governor of the state of Arizona has signed a bill on May 6, 2016 that has expanded the tax credits available for Charitable Tax Credits and Foster Care Organization Tax Credits.  The effective date of the bill will be August 2016 (90 days following the Governor's signature), but it will be retroactive to the beginning of the 2016 calendar year.

Under prior law, the maximum credit for both the Charitable Tax Credit (aka Working Poor Credit) and the Foster Care Organization Tax Credit was $800 for a married couple/$400 for a single.  The credit would allow for $200/$400 towards Charitable Organizations and an additional $200/$400 towards Foster Care.  As long as the total contribution did not exceed the $400/$800 amount based on filing status, you could claim up to that amount for purposes of reducing your tax liability to the state of Arizona.

Under the new law, in 2016 there are 2 changes.  The first change is that the Charitable (Working Poor) Tax Credit will be doubled, allowing single taxpayers to make contributions of $400, married can make $800. The second change is to allow contributions to Foster Care Organizations to be $500 for single and $1,000 for married taxpayers.

The effect of these changes is to increase the allowed tax credits for the organizations that qualify under these credits.  So instead of being capped to a total of $400 for single, $800 for married, the tax credits now allow a total of $900 for single, $1,800 for married between the combination of the 2 credits.  This is the way that I am reading the text of the law but I am interested to see how the Arizona Department of Revenue applies the law to the forms and instructions for the 2016 tax returns.

If you would like to see a list of qualified organizations, visit the Arizona Department of Revenue page and select 2016 Qualifying Organizations here: Tax Credits Lists

As a reminder, these contributions may also qualify for Federal charitable deductions if you itemize on Federal Schedule A.

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