No commentary this year, just a reminder that theout-of-balance Arizona tax system makes it exceedingly easy, and almost entirely cost-free, to make several types of charitable donations--at least for relatively well-off taxpayers. Of course, you should be giving to charity anyway, and I hope you do, well beyond taking advantage of these credits. But if you’re charity-challenged, Arizona makes it really easy even for the obnoxiously or ideologically cheap to pretend to act charitably.
Several tax credits let you reduce your state income taxes by the entire amount of your donation. This discussion, as before, assumes you itemize deductions and don’t pay alternative minimum tax (AMT). If so, donate by December 31, then in April, you pay that same amount less in state income taxes by the amount of the donations due to several dollar-for-dollar tax credits. All it costs you is some time (and maybe a stamp where you can’t or don’t give online).
First, contributions to “private school tuition organizations” that offer scholarships to private schools qualify for a tax credit for individuals of up to $500 and for married couples up to $1,000. Please consider giving to Schools With Heart Foundation, 1131 E. Highland, Phoenix, AZ 85014. Designate your contribution for The Family School, which (in addition to getting our annual contribution) was the site of our son’s community service project; he and his buddies cleaned and painted one of the school buildings 4 years ago.
Schools With Heart doesn’t have online contributions, so you have to write and mail a check and designate the check for The Family School (in a cover letter or on the memo line of the check). Schools With Heart is one of the better PSTOs; it doesn’t let donors earmark for specific children and doesn’t spend money on insiders’ salaries.
You contribute now, then report your contribution on Form 323 when filing state income taxes in April, getting a full dollar-for-dollar credit up to the cap. But make sure to include this and your other donations as charitable contributions on your federal return to get the full benefit.
Second, this being Arizona, there's a less-generous public school tax credit lets single taxpayers give and get back up to $200, and married taxpayers, up to $400. You write the check directly to the school, not to a PTO or foundation, and report this credit on Arizona Form 322.
Of course, wealthier school districts benefit more from these tax credit donations, so if you want your money to make more of a difference, you should contribute to a school in the Isaac School District, 3348 W. McDowell Road, Phoenix, AZ 85009. You can download the contribution form, on which you designate a specific school to receive the donation, or call Sophia L. Flores at (602) 455-6774. Your gift is far more significant in a school district with (last I checked, the website hasn’t been updated) 90 percent of its students at or below poverty and two-thirds from non-English-speaking homes.
Third, donations to charities which assist low-income residents qualify for another tax credit if you exceed the “baseline” of your charitable contributions for 1996 or the first year you itemized, if later. This particular credit is available up to $200 for single taxpayers and $400 for couples. Lots of Arizona charities qualify for this Form 321 credit, both those providing services and certain “umbrella” organizations (like the United Way) that providing funding for service provider. The list for 2011 is here. You may already have donated to one of these organizations, so take advantage of this credit if you did--and maybe give some more?
Also, 2011 is now the last year for some qualifying organizations. Effective January 1, 2012, a “qualifying charity” cannot provide or provide referrals for, or financially support a charity that provides or provides referrals for, abortion. A.R.S. §43-1088(H)(3). Just more of that “less-government-is-best, except when it isn’t” philosophy for which we’re famous in Arizona.
But if you haven't made a qualifying donation yet, I serve on the national and local advisory board, and having disclosed that can urge you, without any conflict whatsoever, to contribute to DevereuxArizona and its behavioral health programs. Devereux’s H.O.P.E. 4 Kids Fund provides recreation, gifts, and support for kids in behavioral health programs who otherwise would have to do without. You can help at no cost to you because you’ll pay exactly that much less in state income taxes. Send your check to Devereux Arizona, 11000 N. Scottsdale Road, Suite 260, Scottsdale, AZ 85254, or click here to donate to the program.
Additional information on these three tax credits, and links to the necessary Arizona tax forms, is available from the Arizona Department of Revenue’s tax credit page. However, the page hasn’t been updated to include two other available Arizona tax credits.
The first is the Arizona Military Family Relief Fund tax credit which, for tax years through 2012 only, allows taxpayers to claim $200 for single taxpayers or heads of households, and $400 for married couples filing joint returns, for MFRF donations. To claim the credit, you need a receipt from the Arizona Department of Veterans’ Services, and to give you a receipt, the ADVS needs your full name, address, and last four digits of your Social Security number, required by A.R.S.§41-608.04(H). The MFRF is also capped at $1 million a year, so you need to give before they reach the ceiling, which they did last year. As of November 8, they were 18% of the way there for 2011. Celebrate the return of the last US troops from Iraq this December by sending your contribution to MFRF, c/o Arizona Department of Veterans’ Services, 3839 N. 3rd Street, Suite 209, Phoenix, AZ 85012. The contribution form is here, or you can call Travis Schulte, the MRFR manager at ADVS at (602) 234-8403.
The same deal applies as with the other credits; you take the credit on your Arizona return, and make sure you include it in your charitable donations for deduction on Schedule A of your federal return, and the contribution is completely offset by the credit and deduction and costs you nothing.
Then there’s a fifth credit available, from Arizona’s voter-approved but endangered system publicly-financed state elections. Despite the recent U.S. Supreme Court decision, you can still write a check in 2011 and pay less in state taxes in April, 2012. (However, it’s not a true dollar-for-dollar credit because political contributions are not deductible for federal taxes.) The credit is now $670 for individuals and $1,340 for couples, or up to 20% (yes, that’s one-fifth) of your total state tax liability, whichever is greater.
Send your contribution to Citizens Clean Election Fund, 1616 W. Adams, Suite 110, Phoenix, AZ 85007. There are no specific forms for this credit, either for the donation or for your Arizona tax return, where you instead list the credit directly on your Form 140. Also, the Commission no longer accepts online contributions, so you have to write and mail a check. For more information, see this page on the CCEC website. You can’t designate the contribution for a particular candidate or party; instead, you’re limited to supporting democracy in general.
So make some donations by December 31 and reduce your state taxes this coming April 15 by the precise amount of your ostensible generosity.