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Tax credit how it works

tax credit how it works

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Arizona law provides a credit for cash contributions made to certain charities that provide help to the working poor.

Most commonly, the amount of this credit is $200 for single taxpayers or heads of household. For married taxpayers,

the maximum credit is $400.

In order to take advantage of this opportunity to direct your tax dollars you must:

• Give $400 ($200 if single/head of household) to a qualifying 501(c)(3) organization of your choice Donate here

• Ensure the organization has your name, address & telephone number for a written receipt of your gift for tax records

• Complete your charitable contribution on your Arizona return and claim the credit

What qualifies a charity for the Tax Credit? A qualifying charity is one that is exempt from federal income tax under IRS Code Section 501(c)(3). The charity must be designated as a

community action agency that receives Community Services Block Grant Program money under the United States Code, Title 42, Section 9901. The charity must spend at least 50 percent of its budget on services for Arizona residents who receive Temporary Assistance for Needy Families benefits or for low income Arizona residents and their households.

For the purpose of this credit, qualifying services are services that meet the recipient’s immediate basic needs. Services must be provided and used in Arizona. Services meeting these needs include cash assistance, medical care, childcare, food, clothing, shelter, job training and job placement services.

Note: A credit is possible only if you have a Arizona tax obligation and if the credit claimed is less than your Arizona tax obligation. If the credit claimed is more than your current year Arizona tax obligation, the unused credit may be carried forward up to 5 years.

Qualifying donations may also be made through “umbrella” organizations (e.g. United Way) provided you designate that your donation be given to a qualifying 501(c)(3) charity.

Category: Credit

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