Arizona Raises Individual Contribution Tax Credit Limits for 2016

The Arizona Department of Revenue recently updated their publications for the personal income tax credits allowed to individuals for making qualified charitable contributions. The updated publications disclosed increases in maximum credits allowed for 2016, among other changes. Additionally, they made changes to the lists of Qualifying Charitable Organizations and how the Foster Care Charitable Organization credit can be claimed.

These qualified contributions provide opportunities for you to provide financial support to charitable organizations while reducing your Arizona tax liability dollar-for-dollar. Additionally, the Arizona Department of Revenue maintained and did not eliminate other contribution credits from 2015. A married couple could make $4,773 of individual contributions in 2016, include these deductions on their Federal itemized deductions, and receive the dollar-for-dollar credit on their Arizona tax return. In the event all credits are not used in the current tax year, they are carried forward and can be utilized in the following years.

Below is a summary of the individual charitable tax credits available in Arizona for 2016:

2016 Arizona Individual Tax Credits

Married Filing Joint All other Filers
Qualifying Charitable Organizations $800 $400
Public Schools $400 $200
Private School Tuition Organizations $2,173 $1,087
Arizona Military Family Relief Fund $400 $200
Qualifying Foster Care Organizations $1,000 $500
Total Available Credits $4,773 $2,387

Qualifying Charitable Organizations that Provide Assistance to the Working Poor: Form 321

A credit up to $800 for married couples filing a joint return and $400 for all other filers is available for cash contributions made to Qualifying Charitable Organizations. These organizations provide help for disabled children or severely ill people. The qualifying organizations change from year to year; therefore please refer to the list below before selecting an organization for your 2016 contribution.

A major change from 2015 is that Arizona extended the deadline for these contributions to be made to April 15th, 2017 instead of by December 31st. Furthermore, the Foster Care Charitable Organizations will be a separate contribution credit from the Qualifying Charitable Organizations. See below for more information.

For a list of Qualifying Charitable Organizations for 2016, click here.

Public School: Form 322

A credit up to $400 for married couples filing a joint return and $200 for all other filers is available for payments to Arizona public and charter schools. These payments must be for extracurricular activities, character education programs, standardized testing fees, preparation courses for the SAT, PSAT, ACT, advanced placement and international baccalaureate diploma tests, career and technical preparation programs. The fees can be made on behalf of your child.

Additionally, the payment can be made up to April 15th, 2017 for the 2016 tax year.

Private School Tuition Organizations: Form 323 & 348

A credit up to $2,173 for married couples filing a joint return and $1,087 for all other filers is available for contributions made to Private School Tuition Organizations (STO). Please note in order for the contributions to qualify, they have to be made to the tuition organization not directly to the school. These contributions cannot be made in the name of any of your dependents, however, can be designated for a relative or non-relative as long as they are not a dependent on your tax return.

The full credit amount is broken into two credits. The first is a $1,090/$545 credit that provides scholarships or grants to qualified private schools. Once this credit’s maximum has been met, a couple or individual can make an additional contribution to a STO for the Private Learning Uplifting Students credit. This credits maximum for 2016 is $1,083/$542 respectively.

Additionally, the payment can be made up to April 15th, 2017 for the 2016 tax year.

For a list of qualifying organizations, click here. 

Arizona Military Relief Fund: Form 340

A credit up to $400 for married couples filing a joint return and $200 for all other filers is available for payments made to the Military Family Relief Fund. The program provides financial assistance to the families of active duty service members and post 9/11 veterans. There is a state mandated cap for the tax credit of $1M, which historically has been reached by mid-December. If the cap has been met, they will return the uncashed check if the contribution was made with the credit donation form below.

For the donation form, please click here. 

Qualifying Foster Care Charitable Organizations: Form 352

A credit up to $1,000 for married couples filing a joint return and $500 for all other filers is available for payments made to Qualifying Foster Care Organizations. Starting in 2016, the Foster Care Tax Credit will be reported separately and not with the Working Poor Credit as it was in 2014 and 2015. The deadline for contributions has been extended this year to April 15th, 2017 from December 31st.

For a list of qualifying organizations for 2016, click here.

For more information, please contact us at 520-624-8229, or email us at rcmtucson@rcmllp.com.

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