While thoughts of taxes often bring feelings of stress, that doesn’t have to be the case. If you live in the state of Arizona, there is a way that you can use your funds to benefit both yourself and your community. By taking advantage of the Arizona Charitable Tax Credit, you can receive dollar-for-dollar reductions in your Arizona state tax liabilities while helping working poor charities such as Paz de Cristo. According to the National Philanthropic Trust, there are more than 1.5 million charitable organizations in the U.S. Keep reading to learn more!
What Is the Tax Credit?
The Arizona Charitable Tax Credit is comprised of two individual income tax credits for charitable contributions, which are nonrefundable. To receive the credit, you direct funds to Qualifying Charitable Organizations (QCOs) such as Paz de Cristo and/or Qualifying Foster Care Charitable Organizations (QFCOs). If you are married filing jointly, the maximum allowable credit for contributions to QCOs is $800 and to QFCOs is $1,000. If you are single, a head of household, or married filing separately, you can donate up to $400 to a QCO or $500 to a QFCO. When you donate, you are provided with a dollar-for-dollar tax benefit. This allows you to reduce your state tax liability for each dollar that you donate. Not many people know that the tax credit for gifts towards QCOs dates back to 1998. Back then, it was referred to as the ‘Working Poor Tax Credit.’
What Happens With My Funds?
Qualifying Charitable Organizations are described as organizations that ‘provide immediate basic needs to residents of Arizona who receive temporary assistance for needy families (TANF) benefits, are low-income residents of Arizona, or are children who have a chronic illness or physical disability.’ Paz de Cristo, for instance, utilizes the funds that we receive to provide baths, food boxes, and help to those who need additional job or life skills.
How Do I Take Advantage of the Tax Credit?
The process is simple! First, you choose a certified QCO or QFCO to direct your funds to. Once you make your donation, you hold onto the receipt of your gift that you receive from the charity. You must provide a copy of this receipt with your tax return. Next, you will complete the required tax form in order to claim one or multiple credits for your gift or gifts. For QCOs, you will fill out Arizona Form 321. For QFCOs, you will fill out Arizona Form 352. Find out what your individual tax return is. Then, subtract your tax credits from your tax liability to decrease your Arizona state tax balance. Include the completed form with this return.
To learn more about the Arizona Tax Credit federal deduction, or to find out information about volunteer opportunities, reach out to Paz de Cristo. We are always ready to help you on your journey towards bettering your community!