In Arizona, you can make a donation to a qualified organization and receive a dollar for dollar credit against the Arizona state tax you owe. This donation will put you in a situation where you will be in what is considered a tax neutral position. In other words, you will have satisfied your tax liability by making this donation in lieu of paying tax to the Arizona Department of Revenue.
The real benefit is that you get to decide how your tax dollars are spent. They can be kept local. By donating, you get a say in how the money is spent by choosing which of the tax credit eligible organizations you contribute to.
You can contribute up to the amount of your expected Arizona tax liability. If you contribute more than your total state tax amount, the credits can be carried forward five years, so do not worry if you end up with more credits than taxes. In general, you must make your tax credit donations by April 15, 2021, in order for them to apply to the 2020 year. You can find additional information on the Arizona Dept of Revenue state tax credit page: https://azdor.gov/tax-credits.
What types of organizations qualify?
Contributions to the following types of organizations qualify for these credits. Check with your favorite organization.
Qualifying Charitable Organizations – $400 single; $800 married filing jointly
Qualifying Foster Care Charitable Organizations – $500 single; $1,000 married filing jointly
Donations to Public Schools (including Charter Schools) – $200 single; $400 married filing jointly
Donations to Private School Tuition Organization – $545 single; $1,090 married filing jointly (and Plus $542 single; $1,083 married filing jointly)
For example, you can make a donation to each of the above type organizations satisfying your tax liability and not have to send a dime to the state for your tax liability.
What do you need to do?
Contact your favorite charitable organization. Decide how much you want to donate within the above guidelines. Get a confirmation letter from the organization showing the amount donated along with the required organization qualifying number. Give the information to your tax preparer.
Support your local community, keep your tax dollars local – the best of both worlds. We unfortunately have to pay taxes, but fortunately we now have a say where they are spent.
So, direct your tax dollars where you believe they can best be used. QCBN
Enjoy the video to learn more about WYGC as a Qualifying Charitable Organization: youtube.com/watch?v=B0y7AGVJZiI.
For more information, go to Prescott Area Tax Credit Coalition prescottareataxcredit.com/.
By Steve Calabrese
Steven Calabrese, CPA is the CFO of West Yavapai Guidance Clinic. He also is
the owner operator of a website known as thebiweeklyadvisor.com. Such topics as budgeting, investing, paying off debt and
goal setting are discussed.