Tax Insights

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Arizona tax credits update

With a just a couple of weeks left in 2016 and a lot of uncertainty for the near future when it comes to tax law, it’s important to focus on some of the things we can (mostly) control in our lives, like Arizona tax credits! This year-end brings deadlines, cutoffs and tax planning opportunities to be aware of, as well as some interesting statistics about Arizona taxpayers’ donation habits.

Arizona, tax credits, year-end, time is running out

Even as credit maximums rise and qualifications expand, we’ve seen a drop in Arizona taxpayers taking advantage of the education credits over the past few years. While the credit for donations to public schools dropped a little over 5.5% from $51million in 2014 to $48.1 million in 2015, the higher capped private school tuition credits dropped a substantial 15.5% from $87.1 million to $73.6 million. Both of these credits’ limits have been raised for 2016 so we’ll see if this leads to higher donations in the upcoming reporting period.

It’s also important to note that the Military Family Relief Fund has reached its $1 million donation cap for this year. For those looking to donate and take advantage of this $400 credit, it typically caps out sometime around Thanksgiving every year, so plan accordingly for 2017.

Speaking of planning for 2017, taxpayers should keep in mind that the cutoff to donate on many of these AZ tax credits for the 2016 tax year is pushed to April 15, 2017. Making a donation in 2017 prior to April 15 gives the taxpayer flexibility to take the credit in either year. The taxpayer can then decide accordingly if they want to make any additional donations in order to lower their tax liability. In most cases it would be very beneficial for taxpayers to wait until after we ring in the New Year to get generous with their wallets.

The extended April 15, 2017 date applies to all of the following credits:

  • Credit for Contributions to Certified School Tuition Organization (Form 348)
  • Credit for Contributions to School Tuition Organizations (323)
  • Credit for Contributions Made or Fees Paid to Public Schools (Form 322)
  • Credit for Contributions to Qualifying Foster Care Charitable Organizations (Form 352)
  • Credit for Contributions to Qualifying Charitable Organizations (Form 321)

For more information on these credits, click here.

Mark McInnis