Do you owe taxes to the state of Arizona that you would really like to avoid? Fortunately for you, there are a couple different ways that you can get the best use of your money spent. Here are some tips on how to save on Arizona taxes.
If you just prepared your individual tax return and unexpectedly have some tax owed to Arizona, you can still pay those dollars to somewhere other than the government! Arizona offers several versions of dollar-for-dollar tax credits to countless charities and schools. You can make this donation any time prior to the April 15 filing deadline.
To give an example, if you owe $400 to Arizona, you can make a $400 deduction to a qualifying charity before April 15, and then you will receive a dollar-for-dollar credit on your Arizona return, meaning you would owe $0 for last year. You still have to pay the money, but at least it goes to a cause you care about! For a single taxpayer, the maximum amount you can shift is $2,483 and for married couples it is $4,966. This allows you to shift up to those amounts of tax owed to charities instead of the state government. To see a detail of what Arizona credits are available, please click here.
The one downside about making this donation is that you don’t get a charitable deduction on the federal return because you are getting a tax credit in Arizona instead. However, there is a way you could possibly still claim a tax deduction.
The tax deduction on Schedule A is limited to $10,000, but if you are below the $10,000 limit, you can take a “tax” deduction for the amount donated to get an Arizona tax credit as it’s treated as a state tax payment. You only benefit from this if you itemize deductions on your federal return, instead of taking the standard deduction.
Although these options don’t let you escape from making a payment for the amount owed, they can put your dollars to better and more meaningful use. If you have any questions about the credits, please reach out to a Henry+Horne tax professional!
KC Kolb CPA