Skip to content

2020 Arizona Tax Credit Limits

Arizona individual taxpayers have the opportunity to redirect state income tax to a variety of Arizona charities through the use of Arizona tax credit contributions. Taxpayers do not need to itemize to claim the tax credits. A couple filing a joint return in Arizona can qualify to redirect as much as $4,565 for 2020.

A taxpayer can contribute and take all the credits, subject to the amount of state tax for any particular year. The credits are non-refundable. Unused amounts of credit carry forward for five years, except for the military credit, which does not carry forward.

Donating to tax credit eligible organizations will most likely leave you in a tax neutral situation – meaning you’ll pay about the same total amount whether you use the tax credits or just pay the tax. But 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, most of the credits can be carried forward five years, so not to 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.

How Do I Make a Tax Credit Donation?

Most organizations provide a form or instructions on their website on how to donate. Some organizations allow you to donate by credit card online. Others require you to print a form and mail it in with a check. Most organizations will mail you a receipt or letter that verifies your donation amount.

Contribution to Qualifying Charitable Organizations

Charity must be on this list:

https://azdor.gov/sites/default/files/media/CREDITS_2020_qco.pdf

Single, Head of Household, or Married Filing Separate $400, Married Filing Joint $800.

Can make contribution up to April filing deadline for prior year credit.

Contribution to Qualifying Foster Care Organizations

Charity must be on this list:

https://azdor.gov/sites/default/files/media/CREDITS_2020_qfco.pdf

Single, Head of Household, or Married Filing Separate $500, Married Filing Joint $1000.

Can make contribution up to April filing deadline for prior year credit.

Contribution or Fee Paid to Public School for Extracurricular Activities

Must be a public school in Arizona – to find one go to:

https://azdor.gov/sites/default/files/media/PUBLICATION_ADESchoolListing.pdf

or:

https://ade.az.gov/edd

Single, Head of Household, or Married Filing Separate $200, Married Filing Joint $400.

Can make contribution up to April filing deadline for prior year credit.

Allowed to use fees paid for your child to participate, as well as direct contributions to the school.

Fees paid for your child to participate are not a federal charitable deduction.

Contribution to Private and Certified School Tuition Organization

Organization must be on this list:

https://azdor.gov/sites/default/files/REPORTS_sto-i-list.pdf

2020 Private School Tuition Organization (Form 323):

$593 Single, Head of Household, or Married Filing Separate, $1,186 Married Filing Joint

2020 Certified School Tuition Organizations (Switcher, aka plus, overflow or other name chosen by the Organization) (Form 348):

$593 Single, Head of Household, or Married Filing Separate, $1,186 Married Filing Joint

Limits are indexed each year. Can make contribution up to April filing deadline for prior year credit.

Keeping Records

After you contribute, don’t forget to print and save the confirmation page to provide to your us and/or keep for your tax records.

How Tax Credits Work

Assume you normally pay about $3,000 in total Arizona state taxes. This year you decide to contribute to organizations eligible for the tax credit.

Let’s assume you make two tax credits (the Qualifying Charitable Organization Tax Credit for $800 and the Public School Tax Credit for $400) for a total of $1,200.

You get a dollar-for-dollar credit against state taxes owed for $1,200. By donating to tax credit eligible organizations, now your total state tax liability equals $3,000 less the credit of $1,200, for $1,800 of remaining tax liability. Your total dollars paid remains $3,000 whether you use tax credits or not – it’s either $3,000 all paid to the state, or $1,200 paid to tax credit eligible organizations and $1,800 paid to the state. If you had already paid in the full $3,000 in state taxes during the year, you would get a refund for the $1,200.

When you have your tax appointment, please bring copies of your receipts for any contributions you make to organizations eligible for the above credits. We will happily include the appropriate credit forms as part of your Arizona tax return. Please contact us if you have any questions about the AZ tax credits.

We take care of your books for you, so you can get back to the job of running your business and generating profits.
Learn More...
We offer payroll solutions that meet your business's needs and enable you to spend time doing what you do best--running your company.
Learn More...
We offer a variety of services to help make sure that you are taking full advantage of Quickbooks' many features.
Learn more...
We're here to help you resolve your tax problems and put an end to the misery that the IRS can put you through.
Learn More...
We offer one-on-one guidance and a comprehensive financial plan that helps manage risk, improve performance, and ensure the growth and longevity of your wealth.
Learn More...

© Siegler & Ferry CPAs 2021