Nonprofits who work to address new economic, public health and educational disparities among individuals in Maricopa County have felt the sting of COVID-19, especially when it comes to fundraising. As many families struggle with emerging-needs such as food, shelter and financial stability, United Way and our many nonprofit and school partners rely more than ever on tax credit contributions, which also gives donors a break on state income tax liability. The Arizona Charitable Tax Credit repays you dollar-for-dollar on the money you donate. This gives you control of where your tax dollars go! It is truly a win: win, because Arizona nonprofits and schools get the support they desperately need, while donors receive an Arizona State tax credit. This helps make an immediate impact and measurable difference in the lives of Arizona families.
There’s no catch! A married couple filing jointly can get a tax credit for up to $800 off their Arizona State tax liability by leveraging a donation to United Way. Similarly, individual filers receive a dollar-for-dollar credit of up to $400. Leveraging the tax credit for United Way does not preclude you from leveraging other categories of Arizona tax credits available in support of other nonprofits. Each credit is considered separate, so you can claim the maximum amount across all five categories of credits, as long as you meet the requirements for each donation. Outside of the Arizona Qualifying Charitable Organizations, here are the other eligible tax credits:
- Qualifying Foster Care Organizations, with limits of $500 for individuals and $1,000 for married couples.
- Public School Tax Credit Organizations, with limits of $200 and $400.
- Private School Tuition Organizations, for which limits increased this year to $593 for individuals and $1,186 for couples.
- Certified School Tuition Organizations — who may receive your contribution if you’ve already maxed out the Private School Tuition Organization credit first) — for which limits increased to $590 individually and $1,179 for married couples.
Valley of the Sun United Way is considered an Arizona qualifying charitable organization, which means we provide basic needs to qualifying low income families and individuals, the chronically ill and disabled. Our organization receives tax credit contributions and distributes them to other nonprofit partners in the community. The tax credit makes it easy for everyone to do their part and activate solutions for those in need. It’s a perfect way for taxpayers to benefit by not having to itemize their deductions, and as a way to decrease their annual state tax bill.
Also of note, the Cares Act was passed in 2020 in response to the COVID-19 pandemic, for taxpayers who make contributions that do not qualify for state tax credits.
- Individuals taking standard deductions can take up to $300 in above the line deductions for qualified charitable gifts to 501c3 nonprofits.
- Individuals who itemize can deduct up to 100% of their taxable income via qualified charitable donations in 2020 (used to cap at 60%). If you previously itemized, you are now incentivized to save every donation receipt.
- Corporations who itemize may deduct up to 25% of income (up from 10%) and food donation deductions up to 25% (up from 15%).
*Information provided above does not substitute for the advice of your tax advisor or attorney. Please see your tax advisor or attorney for full advice on implications of the CARES Act and the Arizona Charitable Tax Credit.
Your contributions to the community are an essential way to support the work of Valley of the Sun United Way during difficult times and as an investment in Arizona’s future. The deadline is April 15, 2021 to submit your forms and to get your tax credit and/or tax deduction for calendar year 2020. Please donate to the Arizona charitable tax credit to ACTIVATE: Solutions for families in Maricopa County TODAY!