By Dennis J. Rogers, CPA, CFP®

It is time for the annual reminder for you to save on your state taxes by taking advantage of the Arizona State tax credits.  Arizona provides dollar-for-dollar tax credits for seven types of donations.  These credits apply directly against your state income tax liability, so you get back whatever you give if you have a state tax liability.  Remember, even if you have a refund, you can benefit from this.  It may be used to increase your refund.

Private School Tuition Tax Credit * You can give up to $1,308 per year, if you are married filing a joint return ($655 if single) to a program that gives scholarship funds to private school students. This amount is indexed for inflation annually.  See the Arizona Department of Revenue (https://azdor.gov/tax-credits/credits-contributions-certified-school-tuition-organizations) for a list of qualified programs.   The scholarship cannot directly benefit a child who is your dependent. You may donate to a qualified tuition organization by April 15, 2024, and still take the credit in 2023.

Additional Overflow / Switcher Private School Tuition Tax Credit *

If you fully fund the above credit, you may be able to fund an additional $1,301 ($652 if single) for the tax credit. It must be for a child who previously attended public schools and has switched to private school for the current year.  Once the child makes the switch to private schools and receives the first-year scholarship it may continue in future years. 

Corporate Tax Credit There is an additional tax credit with an unlimited maximum dollar amount available to businesses.  S Corporations can donate and have the credit pass through proportionately to the individual shareholders.  Learn more about that by following this link: sto4kidz.org.

Credit for Contributions Made or Fees Paid to Public  Schools *  You can give up to $400 if you are married filing a joint return ($200 if single) to your local public school for use toward extra-curricular activities for students or to support character education.  You can also claim this credit for fees you pay a public school for extra-curricular activities or character education for your own child.    You may donate to a school by April 15, 2024, and still take the credit in 2023.  See the list of schools here: https://azdor.gov/sites/default/files/media/PUBLICATION_ADESchoolListing.pdf.

Credit for Contributions to a Qualified Charity * You can get a credit, rather than a deduction, for donations to organizations, which have been listed by the Department of Revenue to be of service to the working poor.  The maximum credit is $841 for a married couple filing jointly ($421 if single).  Three organizations I am aware of that have been listed are Choices Pregnancy Centers, Teen Challenge, and Phoenix Rescue Mission. The Arizona Department of Revenue has a list of qualified organizations on its web site at https://www.azdor.gov/TaxCredits/QualifyingCharitableOrganizations.aspx.  

Credit for Qualified Foster Care Charitable Organization * You can get a separate credit, rather than a deduction, for donations to organizations, which have been listed by the Department of Revenue to be a qualified foster care organizations of up to $1,051 for a married couple filing jointly ($526 if single).  Organizations which provide services to under age 21 persons in transitional independent living programs now can count toward required services for an organization.  You may find qualified foster care organizations on the Arizona Department of Revenue web site at https://www.azdor.gov/TaxCredits/QualifyingCharitableOrganizations.aspx.  

The Arizona Military Family Relief Fund Credit * You can give up to $400 per year if you are married filing jointly ($200 if single) to this program to help military families. The program can only accept a total of $1 million in donations, so do it early.  You will have to mail a check and they must receive it before December 31^st to qualify.  Find out more and download the giving form at their website at: https://dvs.az.gov/mfrf.

  What to do!  If you have not already taken care of these credits and want to do it, here is a quick action plan:

1. Go to https://sto4kidz.org/ to donate online for the Private School Tuition Credit. You may designate a school and/or a student if you would like.  If you do not have a student in mind, please be aware that Phoenix Christian Preparatory School is working to help increase the number of foster children who can have access to a private school education.  If you would like to help them, put Phoenix Christian Preparatory (K-12) down for the school and in the place of a student’s name put “PC Foster Care”.  
2. If you have fully funded the first Private School Tuition Credit and want to do more, go to https://sto4kidz.org/  and make a separate donation for a child who switched from public to private school. You may do this one for a Phoenix Christian School foster child as well.  
3. Drop off a check at your local public school and make sure they know you want it to go toward this program.  See the Arizona Department of Education link for qualifying schools in your area.
4. If you have not already given to a qualifying Arizona organization during the year, go ahead and do so.  Choices Pregnancy Centers (https://www.choicesaz.com/), Teen Challenge (http://www.tcaz.org/), and Phoenix Rescue Mission (http://phoenixrescuemission.org/), are ones I know qualify.  You can send a check or donate on the web site for any of them or any other organization you want to support.
5. Ohana (https://www.ohanaaz.org/taxcredit) has a program which qualifies for the foster care organization credit.  You can donate with them on-line or call them to make arrangements.  There are many other programs you can find on the Department of Revenue web site, as well. 
6. Go to https://dvs.az.gov/mfrf and learn about the Military Family Relief Fund and download the form to send your check to them.  

* Source: www.azdor.gov

Material discussed is meant to provide general information and it is not to be construed as specific investment, tax, or legal advice. Neither United Planners nor its financial professionals render legal or tax advice. Please consult with your accountant or tax advisor for specific guidance.

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Dennis J. Rogers, CPA, CFP® is a Registered Principal offering securities and advisory services through United Planners Financial Services. Member FINRA/SIPC. FireSky Financial and United Planners Financial Services are separate companies. He is a partner in a financial advisory practice in Phoenix that focuses on helping clients make smart decisions about their money based on their personal core values. He can be reached at drogers@fireskyfinancial.com or 602-748-1900.