Sunday, December 16, 2012

Simplified Nonpolitical Arizona Tax Credit Column

Here's the annual tradition.  The column may have died in 2008, but we're still lighting tax candles on this personal blog.  Note a couple of changes from past years:

  • First, the Military Family Relief Fund credit has been extended through the 2018 tax year.
  • Second, the legislature expanded the private school tax credit, both by indexing the original one to inflation and by creating a second credit.  There are now two private school credits: one for contributions to private school tuition organizations (PSTOs), and a second contribution to certified school tuition organizations (CSTOs) for scholarships  for new students who weren't in private school previously.  There are two separate tax forms involved now; the "traditional" Form 323 contribution is now capped at slightly higher amounts, $503 for single taxpayers, $1,006 for married filing jointly.  If you've fully maxed out on that contribution, you can make the "new" Form 348 contribution, an additional $500 single, $1,000 married filing jointly.
  • Third, the legislature eliminated both the $5 check-off tax credit and the dollar-for-dollar tax credit for contributions to the Citizens Clean Elections Fund.  I wasn't sure I was going to make a Clean Elections contribution this year; with matching funds now unconstitutional, I was having doubts about the utility of Clean Elections anyway, but the legislature anticipated my uncertainty and made my decision for me.
Here are the links you need.

First, the Private School Tax Credit.  It may not be possible to give online anymore, because you need to fill out a somewhat confusing statement as to whether you have made any prior contributions to a PSTO, because you have to max out on the Form 323 contribution to a PSTO before you can make a Form 348 contribution to a CSTO.  You can make both contributions to Schools with Heart Foundation for benefit of The Family School.  You'll need a form which doesn't seem to be available online, but call Piya Jacob at the Foundation at (602) 274-0071 to get the form so you can make both contributions simultaneously.  The Foundation is certified by the Arizona Department of Revenue to accept (and give receipts for) both types of tax credit contributions.

Second, there's no change to the public school tax credit; again, it's up to $200 single/$400 married filing jointly.  The only difference this year is that you need to write the check to an individual school.  I still recommend the Isaac School District as a worthwhile recipient; their 2012 form is here, just pick a school and send your check to that school before Dec. 31.

Third, no change to the Working Poor tax credit; ADOR cleaned up the list of charities that qualify, which is here for 2012.  Devereux Arizona is still on the list; your contribution to the H.O.P.E. 4 Kids Fund will be put to amazingly good use (with my oversight as a national Board of Trustees member, of course).  Same limits as last year, $200 single/$400 joint.

Fourth, other than having the sunset date pushed out 6 years, there's no change to the Arizona Military Family Relief Fund tax credit: Maximum $200 for single taxpayers, $400 for married filing jointly.  The 2012 contribution form is here.

In each case, you make the donation, then get a dollar-for-dollar credit (up to the maximum) against your Arizona state income taxes.  The donations qualify for deduction from your income for federal taxes, taking the place of the lower state tax deduction.  The private school donations may be made up until April 15, but then you've made the contribution in 2013 for federal tax purposes which may affect your record-keeping and reporting.  It could be an interesting test of how compulsive you are. 

So make some donations by December 31 and reduce your state taxes this coming April 15 by the precise amount of your ostensible generosity.

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