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Statistics indicate that three out of 10 of our neighbors survive on an income that barely covers rent and necessities. You can make a difference in people’s lives by donating to qualifying tax-deductible charities. Here are the top five things you need to know.

Arizona Tax Deductible Donations

Arizona Tax Credit provides dollar-for-dollar for charitable donations. Formerly known as Working Poor Tax Credit, it has a limit of $400 for individuals and heads of households. Married couples contributing to qualifying tax deductible charities can get a credit of $800.

You can make small contributions throughout the year to a food box or working poor charities. The sum of those contributions will be deducted at the end of the financial year as long as it is within the limits.

What Qualifies As a Donation?

There are several misconceptions about donations and tax credits. Many people tend to overlook that not all organizations that contribute to charity qualify as tax deductible charities. Nonprofits must register under section 501(c)(3).

It is also worth noting that not every nonprofit can qualify for either state or tax credit federal deductions. Organizations in sports and civic and social welfare are under the nonprofit section, but they are not eligible.

Charitable Gifts That Do Not Qualify

There are also certain types of gifts that do not qualify under charitable donations despite misconception. For example, if you were to organize fundraising for a friend, you will not be eligible for deductibles. It must be an organization registered as a nonprofit or one working under an umbrella organization.

Another issue with personal gifts is that they don’t qualify if they benefit you. Some examples may include the cost of books sold at a fundraiser or transport costs to an event. The price of the products you give to charity must also correspond to prevailing market rates.

The Issue of Earmarking

You cannot make tax credit federal deductions to an individual through a qualifying nonprofit. The donations given to a specific individual are considered to be gifts channeled through the organization. The principle of discretion stipulates that the charity must have the power to use the donation without the donor’s consent.

There are some limitations to the earmarking rule. The IRS may consider the intent of the organization when determining if the donation is deductible. For example, donating to a scholarship program qualifies and is not a case of earmarking.

Limits to Tax Deductible Donations

It is possible to qualify for tax deductibles if the worthy cause is outside the country. However, the nonprofit has to be registered in the United States.

You can also donate to crowdfunding causes as long as it is not an individual, a product, or a business. However, it is worth noting that promising to give something in the future does not amount to a donation. You can only get a credit for the contributions you make to tax deductible charities.

Before you can send your contributions, ensure that the organization is a nonprofit under section 501(c)(3). Keep your documentation in order, as you may need it when claiming credits for your donations.

Every year, the State of Arizona provides various individual tax credits. You may also get tax credit federal deductions as stipulated by the IRS. The tax credits and deductions enable willing taxpayers to support charities and qualifying organizations. You can enjoy dollar-for-dollar reductions to your tax liabilities by supporting Paz De Cristo.

You may have already heard about tax credit federal deductions and the Arizona working poor tax credit. However, you may not be fully aware of how to maximize the use of such tax credits for community service. Understanding how Arizona tax credits work can open up a community service opportunity while helping you to allocate your taxes to a great cause.

While this guide may be thorough, it is not intended to serve as tax, legal, or accounting advice. Consult your CPA or any other professional advisor before acting on the information herein.

How Does the Arizona Charitable Tax Credit Work?

The Arizona tax credit is a non-refundable income tax credit. It allows taxpayers to make charitable contributions to qualifying charitable organizations and qualifying foster care charitable organizations.

The maximum allowable tax credit is $800 for married couples filing a joint return and $400 for an individual for a QCO. For QFCOs, the maximum limit is higher at $1000 and $500, respectively. It means that you can reduce your state tax burden for each dollar you give to Arizona tax-deductible charities.

The History of The Arizona Working Poor Tax Credit

The Arizona charitable tax credit program started in 1998, commonly known as working poor tax credit. In 2012, the tax credit and deductions were expanded to include certified tax-deductible charities that support the most vulnerable Arizonians.

How To Utilize Tax Credit Federal Deductions

The IRS makes it clear that an individual taxpayer filing their forms needs to subtract any benefits from their charitable giving from the tax credit federal deductions. For example, if you donate $400 to a tax-deductible charity and receive a $100 gift certificate, you may have to deduct the benefit and claim a $300 tax credit.

Additionally, tax credit federal deductions honor the carry forward rule as stipulated by the IRS. Just like in the State of Arizona, you can carry forward your tax credits up to a maximum of five consecutive years.

You can only carry over the portion of the credit that you do not apply to tax. However, you cannot carry over any contribution you gave that was more than the maximum allowed for credit. You can check the IRS website for more guidelines on the tax-deductible filings.

New Tax Credit Federal Deductions Limit for Charitable Donations

Up until recently, the IRS set the limit for individual charitable giving to no more than 50% of the taxpayer’s adjusted gross income. New rules from 2018 stipulate an increase to 60% of the adjusted gross income, allowing you to provide more support to Arizona tax-deductible charities.

Bottom-line

Arizona charity tax credit and tax credit federal deductions make it easier for you to support your favorite volunteer community service organizations while saving money at the same time. Your contribution makes a real difference to Arizonians in need. To get involved in supporting local food boxes in Mesa, AZ, reach out to Paz De Cristo.

25% of the adult population, that’s nearly 63 million U.S. residents, volunteer their energy, time, and talents to make a difference. Would you like to help people when they are in need? Besides community service opportunities and great volunteer opportunities, you can donate much-needed funds.

There are many ways your funds assist Arizona tax deductible charities like Paz de Cristo. You are allowing them to grow and reach even more people that need help. Monetary contributions bring hope to neighbors in need who struggle with homelessness, hunger, and poverty.

Different Ways You Can Bring Hope Include:

• $100 Gives 110 Meals
• $200 Gives Clean Clothes and Showers to 15 People
• $400 Gives Arizona IDs to 33 People Who Need Jobs
• $800 Gives 880 Meals to Prevent Hunger

Receive Money Back When Filing State Taxes

Hundreds of caring people make donations to tax deductible charities. This gives them the ability to receive their money back in the form of a state tax credit when filing their taxes. Arizona’s Charitable Tax Credit is behind this ability. When donating a total of $800 to qualifying charities, you get a state tax credit of up to $800 for those filing jointly.

Know the Steps to Get Money Back

How does a charitable tax credit work? First, you give a donation to participating charities. Then you simply claim your credit at the time of filing state taxes. Finally, you get money back with a dollar-for-dollar credit of up to $800. If you want to give more, you could qualify for a federal tax deduction.

What If You Donate More Funds?

If you donate more than your maximum amount or your state tax liability, your donation may qualify for a tax credit federal deduction. This is in reference to 501(c)(3) nonprofit organizations. Tax situations tend to be unique. Therefore, it is always wise to discuss and verify deductions with a tax professional.

How Is a Tax Credit Different from a Tax Credit Federal Deduction?

A tax credit will reduce your tax liability. It acts in a manner that suggests you already paid the taxes owed. If you owed taxes in the amount of $1,000 the donation amount would be deducted from it. You pay the difference if your tax credit was less than what you owe. The maximum allowed state tax credit for Arizona is $400 for individuals and $800 for couples that file jointly.

A deduction, such as tax credit federal deduction, lowers the amount of income in which tax is calculated. This is in consideration of the tax credit federal deduction. Again, you should always speak with a tax professional concerning deductions and tax credits so you get the best legal advice.

Take Advantage of Tax Credits and Deductions

It’s a good idea to take advantage of tax credits and deductions while helping out those in need. You are doing your part to make sure those that really need assistance are able to take a positive step forward in life. You are literally feeding, clothing, and empowering people who are struggling. Make your donation to Paz de Cristo today and receive a dollar-for-dollar Arizona tax credit.

This morning’s Arizona Republic featured a headline that caught my eye: “5 Ways Your Friendships Can Blossom on a Budget” (Arizona Republic, July 2, 2018).

I was curious how being on a budget affects relationships such that they can grow. I learned a lot. 

It turns out that a 2017 study from Michigan State University found people who treasure their family and friends are actually happier and healthier than people who don’t. The good news is you don’t have to spend a lot of money to appreciate and enjoy your friends.

Writer Brianna McGurran suggested tips to cultivate friendships when your finances are tight or you’re saving for something big.

Volunteering Together

She recommends volunteering together.

“Pick something you both care about like animal welfare, the environment or veterans’ issues, and research local organizations that focus on them. Sign up for an opportunity that takes place every week or month to keep you engaged in the organization, and to give you and your friends a hangout to look forward to. Bonus: It just feels nice to help people.” (Arizona Republic, 2018)

It really does feel great!

Helping People

At Paz de Cristo, we help people struggling with hunger, poverty and homelessness. Right this minute, there are hundreds of veterans, working poor, unemployed, single moms and senior citizens here in the Phoenix East Valley who face dire need. Many haven’t eaten a meal in days. They simply don’t have enough food.

We give them relief by serving a hot, nutritious meal every night. Our chef plans the menu bringing all the ingredients together. Volunteer teams prepare and serve dinner and then clean the kitchen afterward. Our Meal Coordinators make it easy for everyone to have a great time while making a real difference in people’s lives. 

Every month at Paz de Cristo, thousands of meals are provided through our dinners and food box program. We rely on the support of volunteers like you to get food to those who are hungry.

We would love for you join us either as an individual or as part of a group. Multiple volunteer shifts are open for a variety of work from serving meals to distributing food boxes, sorting clothing, managing the front desk and staffing the showers program. 

Get details and reserve your spot to volunteer here