Tax Credit

  • 1. What is a Tax Credit?

    In this instance, the "Tax Credit" is part of a state law that, among other things, allows individuals to donate up to $200 and married couples to donate up to $400 to the public school of their choice and take the donation as a tax credit on their Arizona Income Tax Return (Arizona Revised Statute 43-1089.01)

    2. Can two married taxpayers filing a joint return both be eligible to claim the maximum credit?

    No. The statute allows only one $400 credit per household per year.

    3.  Can a taxpayer receive a refund of these credits?

    No. The credits can only be used to the extent they reduce state tax liability to zero.  Unused amounts may be carried forward gor up to the next five taxable years.

    4. Who is eligible to receive the donation?

    Public schools and charter schools are eligible to receive the donation. Preschools, non-governmental schools, community colleges, and universities do not qualify.

    5. Must a taxpayer have a child in school in order to claim this credit?

    No. There is no requirement that the taxpayer have a child enrolled in a public school in order to get the credit.

    6. Can you give to more than one school?

    Yes, however the total amount claimed cannot exceed $200 for individuals and $400 for married couples in the calendar year, and you must have receipts from each school.

    7. Can you use this as a deduction on your federal return?

    It may be possible, but it is subject to the IRS's policy on donations. For example:  If you are in the 28% tax bracket you might be able to take $56 of your donation as a charitable donation on your federal return. (Please consult your accountant.)

    8. What does this money go for?

    This money can be spent by the individual schools on programs and activities that benefit children. Educational extracurricular activities, musical instruments, uniforms and athletic equipment are just some of the items that can be purchased with these funds.

    9. How can I make a donation?

    You can make your donation at any school. You will be given a numbered receipt for your tax records. To be eligible for credit on your 2020 Arizona Income Tax Return you must make your donation by April 15, 2021.