02/26/2019, By Valley of the Sun United Way
Taxes can be confusing, even more so with all the changes to the laws. At times it’s difficult to keep up with what these changes mean for you! When it comes to what the Arizona Charitable Tax Credit can do for your taxes, we know you have questions and we’ve provided answers! But please keep in mind, this is general knowledge sharing, not official tax advice. Everyone’s individual situation is unique, so consult a tax professional for specific insights.
What’s the deadline for applying the credit to this year’s taxes?
You can make a donation and claim the tax credit for 2018 all the way through Tax Day on April 15, 2019.
Why is the tax credit beneficial for me?
One of the best explanations of the tax credit we have seen comes from our partner, A New Leaf. They said that giving through a tax credit fund is like “telling your tax dollars where to go.” We think that phrase encapsulates how you’re reducing your tax bill while at the same time investing in your community through an organization you trust.
Does every nonprofit have a state tax credit option?
No, not every nonprofit or charity is considered a Qualifying Charitable Organization or Umbrella Charitable Organization, according to the Arizona Department of Revenue. In order to qualify, the guidelines state that the organization must “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.”
Valley of the Sun United Way qualifies through our Helping the Working Poor Fund. Donations to the fund support our community services such as Breakfast in the Classroom, after school care, and financial coaching for families.
What if I already gave to another tax credit (like a local school for example)?
You can claim multiple state tax credits. In addition to making a donation to a Qualifying Charitable Organization or Umbrella Charitable Organization (like VSUW), you can receive a credit for donating to:
- Qualifying Foster Care Organizations
- Public Schools
- Private School Tuition Organizations
- The Military Family Relief Fund
All of them are separate, so you could donate to your school and your favorite qualifying nonprofit, and you’d receive both credits.
What happens if I donate more than I owe on my taxes?
If you make a donation through an Arizona Charitable Tax Credit fund that is larger than your tax bill, you can roll over the unused credit for up to five years. Here is a great example, from the Arizona Department of Revenue’s website:
"For example: During 2018, Mary, a single person, gave $600 to a qualified charity. For 2018, Mary is allowed a maximum credit of $400. Mary’s 2018 tax is $250. Mary can apply $250 of the credit to her 2018 tax liability and carryover $150 of the unused $400 credit to 2019.
Mary cannot claim any credit for the $200 gift that was more than the allowable credit ($600 minus allowable credit of $400)."
I donated to a qualifying organization – now what? I’m not sure how to claim the tax credit when I file.
You’ll need to fill out Form 321, which you can download from the Arizona Department of Revenue website. The form will ask you for a five-digit QCO code to signify which organization you supported. You can look up the QCO code online or contact the organization to get that information.
For reference, the QCO code for donations made to our Helping the Working Poor Fund is 20726. (Please note, you cannot use this code for general donations to VSUW – it is only for contributions to our Helping the Working Poor Fund.)
A closing tip: Form 321 asks you to list all “cash contributions,” which means any money you gave, including through a card or an online form (not literally in dollar bills).
These are just a few questions that come up around tax time regarding the credit opportunity. If you have more questions, feel free to contact us at firstname.lastname@example.org. To get your tax credit today, click below to give to Valley of the Sun United Way’s Helping the Working Poor Fund.