2017 Arizona tax credits

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Melinda Nelson, CPA

The end of 2017 is fast approaching, but you still have time to accomplish a lot in the realm of tax savings. The below Arizona tax credits let you help qualified charities and Arizona schools while saving tax dollars. Eligible Arizona credits can offset your 2017 state income tax, dollar for dollar, while giving you a federal charitable deduction. We’ve got a couple of updates to let you know about.

Credit for Contributions to Private School Tuition Organizations

The 2017 amounts for the Credit for Contributions to Private School Tuition Organizations increased slightly to:

  • Maximum credit single taxpayers: $546
  • Married filing joint: $1,092

Your donation must go to a tuition organization that provides scholarships or grants to qualified private schools.

Credit for Contributions to Certified School Tuition Organizations (Plus/Switcher Credit)

There’s also a slight increase in the 2017 amounts for the Credit for Contributions to Certified School Tuition Organizations:

  • Maximum credit single taxpayers: $543
  • Married filing joint: $1,085

Remember, you must first donate the maximum amount allowed to a private school tuition organization to claim this credit.

If you donate to both tuition organizations, the maximum combined credit for single taxpayers is $1,089 and $2,177 for married filing joint. If you make a qualifying donation between January 1, 2018 and April 15, 2018, you can choose to either claim the credit for 2017 or for 2018. Donations to tuition organizations that benefit your child or dependent will not qualify for the Arizona credit.

Credit for Contributions Made or Fees Paid to Public Schools

2017 amounts:

  • Maximum credit single taxpayers: $200
  • Married filing joint: $400

You qualify for this Arizona credit if you donate or pay fees to a public school to help support their extracurricular activities or character education programs. This credit also allows you to make a qualifying contribution or pay fees between January 1, 2018 and April 15, 2018 and claim it for either 2017 or 2018. You can claim this credit if your donation benefits your child, but you cannot claim a charitable deduction on Schedule A.

You can claim ALL three of these education credits in the same year even if you don’t have a child in school.

S Corporation Private School Tuition Credits

If you’re a shareholder for an S Corporation, there are two corporate private school tuition tax credits that the entity can pass to you. You will receive an Arizona Form 335-S and/or Form 341-S showing the amount you can claim. You can still claim one of these credits even if you have already claimed the maximum amount under the two individual private school tuition credits.

Credit for Contributions to a Qualified Foster Care Organization (QFCO)

2017 amounts:

  • Maximum credit single taxpayers: $500
  • Married filing joint: $1,000

Credit for Contributions to a Qualifying Charitable Organization (QCO)

2017 amounts:

  • Maximum credit single taxpayers: $400
  • Married filing joint: $800

You may claim either credit, or both, in the same taxable year, and you do not need to itemize your deductions to receive the credits. Also, if you get busy during the holidays and forget to donate before December 31, if you make a qualifying contribution between January 1, 2018 and April 15, 2018, you can claim these credits for either 2017 or 2018.

For a list of qualifying organizations for the Arizona credits head to the Arizona Department of Revenue’s website.

Credit for Donations to the Military Family Relief Fund

2017 amounts:

  • Maximum credit single taxpayers: $200
  • Married filing joint: $400

This credit supports the Military Family Relief Fund and helps families of soldiers who are deployed now as well as post 9/11 military and veteran families.

Arizona only approves the first $1 million in donations as credits. The fund typically receives $1 million by early December, so mail your donation in as soon as possible.

Other tax benefits

You can claim a federal charitable deduction for your state tax credit donations as long as your contributions don’t benefit a family member or designated person. You could potentially receive a larger Arizona refund while reducing your federal tax liability, so don’t miss out on the 2017 Arizona Tax Credits!

Melinda Nelson, CPA, Partner, specializes in tax planning and compliance involving closely held businesses and their owners as well as estate, gift + trust taxation. You can reach Melinda at (480) 839-4900 or MelindaN@hhcpa.com.