Individual Income Tax Credit to Charities that Provide Assistance to the Working Poor
The following provides general information about tax credits for donations to charities. For complete details, refer to the Arizona Revised Statutes. In case of inconsistency or omission the language of the Arizona Revised Statues will prevail.
For taxable years beginning on or after January 1, 1998, Arizona Law provides a credit for cash contributions made to certain charities that provide help to the working poor.
- You may qualify for this credit if you make cash contributions to a qualifying charity.
- You may also qualify for this credit if you make cash contributions to a qualified charity through an umbrella type of charitable organization. You must designate the donation be directed to a member organization or member group fund that would qualify on a stand alone basis.
- For 2006 and later years, the maximum amount of the credit is $400.00 for single taxpayers or heads of household.
- For Married taxpayers, the maximum credit is $800.00. If married taxpayers file separate returns, each spouse may claim ½ of the credit that would have been allowed on a joint return.
- This is not a refundable credit. If the allowable credit is more than your tax or if you have no tax, you may carry the unused credit forward for up to the next five years.
- Starting in 2010 you may be able to make credit eligible contributions to a qualified charity that provides assistance to the working poor through payroll withholding. Check with your employer to see if your employer has agreed to withhold contributions for this credit from your pay.
What is a qualifying charity?
It is a charity that is exempt from federal income tax under Internal Revenue Code 501(c)(3). The charity is a designated community action agency that receives Community Services Block Grant Program Money under United States Code, Title 42, Section 9901. The charity must spend at least 50% of its budget on services to Arizona residents who receive Temporary Assistance for Needy Families benefits, who are low income Arizona residents, or who are chronically ill or physically disabled children.
What kind of services must the qualifying charity provide?
Services mean cash assistance, medical care, child care, food, clothing, shelter, job placement and job training services or any other assistance that is reasonably necessary to meet immediate basic needs and that is provided and used in Arizona.
Must a qualifying charitable organization be certified?
Yes, a qualifying charitable organization must send a written certification letter to the Arizona Department of Revenue. The Department shall review each written certification and determine whether the organization meets all the criteria to be considered a qualifying charitable organization and notify the organization of its determination. The Department may also periodically request recertification from the organization.
How can I tell if a charity qualifies?
The Arizona Department of Revenue has revised its list of qualifying charities. During 2009 all previously certified charities were required to recertify. If a previously certified charity no longer qualifies, it will be removed from the Department’s published list effective January 1, 2010. Visit www.azdor.gov to view the Department’s updated list.
How do I get the credit?
For taxable years 2009 and later, the baseline year requirement has been eliminated.
For taxable years 2013 and beyond, the requirement to itemize deductions on the state return has been eliminated. You cannot claim both a tax credit and an itemized deduction for the amount of the contributions made to a qualifying charity for which you are claiming a credit. However, you may claim the Arizona Charitable Tax Credit on your state return and an itemized deduction for the amount of the contribution on the federal return.
How do I get more information?
Find more information at www.azdor.gov/About/FAQs/CharitableTaxCredit and/or consult your tax professional.