Do you have questions about the Arizona Charitable Tax Credit?
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Below are answers to commonly asked questions.
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Q. What is the difference between a tax credit and a tax deduction?
A. A tax credit directly reduces the amount of income tax owed. A deduction merely lowers the income on which taxes will be paid.
Q. When must I donate?
A. You must complete your donation by April 15 to claim a credit for the previous year's return. Donations made after April 15 will be a credit for the current year.
Q. Is this the same as the School Tax Credit?
A. This is a different income tax credit than the School Tax Credit. Taxpayers are able to take advantage of several tax credit opportunities and they work essentially the same.
Q. Do I qualify for the credit if my employer withheld taxes during the year?
A. Yes, the credit reduces your Arizona tax liability even if your employer withheld taxes during the year. Your refund would be higher based upon the amount you donate, i.e. your refund could be up to $800 higher or $400 single/head of household.
Q. Do I qualify for the credit if I do not owe additional taxes at year end beyond what my employer withheld?
A. Yes, you would receive a refund.
Q. Do I qualify?
A. You simply must file an Arizona tax return and have a tax liability.
Q. What happens if I don’t owe taxes at the end of the year?
A. The working poor tax credit reduces your overall state tax liability and is not impacted by your tax withholdings during the course of the year. If you withheld more than what you owed, the credit will result in an increase in your state tax refund. If you have no Arizona tax liability for the current year, you may carry the tax credit forward for up to five (5) years.
Q. How do I file for the credit?
A. After making your donation, there is a very simple line item to complete on your Arizona state tax return.
Important note to donors:
AZTaxCredit.org is not a tax advisor. If you have questions regarding this tax credit, consult your tax advisor or contact the Arizona Department of Revenue at (602) 255-3381.