If you are interested in the Arizona Charitable Tax Credit, chances are you need the details explained in a clear and straightforward manner. This will allow you to maximize the tax benefits available to you while also giving you the opportunity to help those in need. In this short guide, we look at everything you need to know about the Arizona Charitable Tax Credit because directing your funds to a reputable charity that actively cares for their community shouldn’t be confusing.
Understanding the Arizona Tax Credit
This Tax Credit is a nonrefundable income tax credit. It allows you to claim your charitable donation in the form of a tax refund or credit against any state taxes you might owe.
So if you donate to a QOC, the Arizona Charitable Tax Credit offers a dollar-for-dollar tax credit match with a limit of $400 for individuals or $800 for married couples that file jointly.
A fun fact is that the tax credit for donations made to a Qualifying Charitable Organization dates back to the late 1900s when it was referred to as the “Working Poor Tax Credit.”
Another thing to note about this tax credit is it’s only available to individuals, not corporations or partnerships. Additionally, any donation you make should be monetary. So, for instance, you can’t donate a food box, clothes, or toys. You can let your charity of choice take care of doing the active good and directing your funds towards providing for the less fortunate. When you work with charities, they take your monetary donation and use it towards helping feed, clothe, and empower. Helping the homeless in their job search is just one of the many ways in which we seek to empower.
You must also make sure that you donate to the right organization because only donations given to qualifying charitable organizations qualify for the tax credit. So even if you can’t make material donations, you can reduce your state tax burden and the organization that receives your donation will ensure your money makes a difference, one food box at a time. The icing on the cake here is any unused credits from a previous year can carry over to the following years.
How to Claim the Arizona Charitable Tax Credit
The good news is the process of making a donation to a Qualifying Charity Organization and benefitting from the tax credit is simple and straightforward. Simply make your donation, retain the receipt and include a copy of it when you file your taxes. You must use Arizona Form 321 when filling out the tax form to claim your credits. Once you determine your individual tax return, you can then figure out how much to subtract from your tax bill.
This information should help you plan the best way to make a charitable donation and figure out the deduction for your tax liability. Even if you can’t benefit from things like food box donations and other material donations, giving to a charitable organization can change lives.